Earnings Call Transcript - OLB Q1 2022

Matt Kepke, Unidentified Company Representative

Hi. All statements from the OLB Group in this conference call that are not based on historic facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, but are not limited to, statements concerning the impact of COVID-19 on our operations and financial condition, our ability to implement our proprietary merchant boarding and CRM system and to roll out our Omni Commerce and SecurePay applications, including payment methods, to our current merchants and the integration of our secure payment gateway with our crowdfunding platform, our ability to successfully launch a cryptocurrency mining operation and our ability to earn revenue from those new operations. While the Company’s management has based any forward-looking statements contained herein on its current expectations, the information on which such expectations were based may change. These forward-looking statements may rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside of our control, that could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include statements regarding the expected revenue and income for operations to be generated by The OLB Group. For other factors that may cause our actual results to differ from those that are expected, see the information under the caption Risk Factors in the Company’s most recent Form 10-K and 10-Q filings and amendments thereto, as well as other public filings with the SEC since such date. The Company operates in a rapidly changing and competitive environment, and new risks may arise. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results. The Company disclaims any intention to, and undertakes no obligation to update or revise any forward-looking statement.

Ronny Yakov, CEO

Okay. Thank you, Matt. As you guys know, we are a company that is doing online, in-store, on mobile and lately cryptocurrency mining and crypto payments. As far as the COVID situation, we are pretty much back on track 100% with all our merchants and we are extremely excited because we introduced more offerings and more features to them. Today we do approximately – next Slide, Matt. Can you move to the next slide? $1.3 billion in transactions, $28 million in transactions, and we have over 10,500 merchants. Our core business is Omnisoft that is our system that is the eCommerce system. SecurePay is our payment gateway, CrowdPay is our crowdfunding platform and eVance is our onboarding and merchant services. Those merchant services today, they are most of the business and that’s the main foundation of the business. The new services that we started offering this year and for next year would be the Crypto Accept. Crypto Accept is payments with cryptocurrencies. We are also integrating now Crowd Ignition that we just acquired in early of this year. And we’re focusing also on the future, having also ATM machines, Bitcoin mining, and also lending to our existing merchants. So that’s eVance Capital. If you look at – those are the two new subsidiaries that we established in late 2021, its Oilbit is the company that is going to be our intellectual properties and the BitLicense. The idea is we’ll be able to trade the cryptocurrencies on behalf of our customers that are the merchants. And DMint is our Bitcoin mining operation that we already purchased 1,000 machines. We believe that by end of this quarter, we are going to have up and running the entire 1,000 machines that we purchased. The operation is running in Bradford, Pennsylvania in two locations. As you can see, the synergy between the companies is from the merchant services and up to Omni Commerce and crowdfunding and payments. That’s the existing services that we had until last year. You can see the next slide. We added two additional services that are complementary to all the other services. So DMint, the Bitcoin mining and the Oilbit the acceptance of cryptocurrencies has to be part of the integrated system for everybody. Next slide. And you can see on each one of them, what is the achievement that we did this year? We established a ticket system for NFTs through the merchant services. On the payment gateway, we are accepting crypto, the two new locations on DMint that have been established and the BitLicense that is already in motion that we are going to file very soon. We also created a blockchain in the crowdfunding and the new CBD portfolio that we acquired late 2021. And now if you can move – Patrick, do you want to talk about the numbers.

Patrick Smith, CFO

Sure. This time we’ll go over some of the first quarter numbers for this year. The revenue we have this year in the first quarter of 2022 compared to 2021 went from $2.2 million in 2021 to $8.7 million in 2022, which was a 4 times multiple. Most of the growth was due to the new portfolio, and it was also organic. The baseline that we had did increase merchants and also volume and profitability for this quarter. The increase in revenue was actually able to increase a positive EBITDA of around $550,000. Yes, we had an adjusted positive EBITDA of around $550,000. That was up from last year when it was a negative $689,000, which is a $1.2 million increase to our EBITDA. And you can see there, if you take all the assets of the company we have around $45 million in assets. Here in the next slide, also one of the things that really increased was our gross profit. Last year in Q1, we had a gross profit of around $463,000. This year, we have $1.5 million in gross profit. We still have a negative net loss of $1.4 million. The majority of this net loss is related to the depreciation and amortization of the equipment and the purchases of the portfolios last year. So that’s the majority of the loss. But as I stated in the previous slide, we have a positive EBITDA. Also for the first quarter, we are going to end the quarter with around $4 million in the bank. We do not have any debt. The only thing we have open right now is we have some leases on some of our miners from $750,000. But like I said, we’ve got $4 million of cash in the bank and zero debt other than that. The 2022 outlook, we’re currently on pace for $36 million in revenue; this revenue here, the $36 million is only for the fintech products; it does not include the Bitcoin. We are also looking to – by the end of this year, we would like to be net income positive, which we really feel strongly that we will be by the end of this year. Once we have the 1,000 miners up, we actually feel we’ll have another $6.5 million in revenue based off just the Bitcoin mining and that $6.5 million is based off today’s price of Bitcoin.

Ronny Yakov, CEO

Yes. And basically, we strongly feel that our stock is totally undervalued. We are trading almost at half-time revenue compared to anyone else that trades 4 or 5 times revenues. And now we are open to, if anyone has any questions.

Patrick Smith, CFO

One thing I’d like to say real quick, looking at the revenue, the forward-looking revenue of $36 million does not include the Bitcoin mining of $6.5 million. So if everything was to go together, we would have $42.5 million in revenue.

Ronny Yakov, CEO

And lately the volatility of cryptocurrencies has definitely affected that. We are definitely making most of the money today from the merchant services and not from the cryptocurrency. In a way, we have some sort of diversification on revenues. So if one is down, the other one is balancing that. If anyone has any questions, please put them in the Q&A screen. We had earlier some questions that Patrick and I are going to address. Do you expect to have the 1,000 machines up and running soon? The answer is yes, by the end of this quarter, we’re going to have all of them up and running. The second question is, will the company pursue with the hold strategy or sell the Bitcoin as they all buy? The Bitcoin is very low now in price. So we are probably going to hold until it gets to at least back to what it was before, around $45,000 or $60,000. Then we’re going to reevaluate that again. Obviously, we are not planning to raise more money to a lot of the shareholders. Most likely we’re going to do additional financing for more machines in the fashion of debt financing and selling some of those Bitcoin. The eCommerce business is growing month to month in transaction volume and in merchant accounts. Yes, it is growing. It’s growing in a certain percent compared to our existing merchants. The more merchants we have, the more eCommerce we have in addition to that. So it’s complementary services that we provide. We’re going to post also the presentation online and send an email to everyone that was on the call. We plan to file on Monday.

Patrick Smith, CFO

Any other questions?

Ronny Yakov, CEO

If anyone has questions, please put them on the Q&A screen so we can address them.

Patrick Smith, CFO

Yes. One of the questions just came through is how many new merchants have you signed in the first quarter? Right now we’re signing anywhere from 100 to 150 new merchants a month. Some months are a little lower. January was a little low just because it’s a slow month every year, but we’ve added an average of about 100 to 150 new merchants per month. That’s where the organic growth is coming from.

Ronny Yakov, CEO

So Patrick, maybe you want to explain the percentage relationships of how much is Bitcoin mining and how much is fintech?

Patrick Smith, CFO

Absolutely. Right now, our revenue, like I said, was around $8.7 million; out of that $8.7 million, only about 3% right now is related to Bitcoin. 97% comes from the merchant service business, which is our strongest and most valuable piece of the business at this point. It’s growing; it’s growing organically. It’s a great business to be in. And like I said, that’s still the core business that we are focusing on right now.

Ronny Yakov, CEO

And that’s a repeating business. So basically we have a good idea of how the next month is going to look based on trends that we have used for years. Usually, merchants stay with us, on average over seven years. Okay, any other questions? Somebody’s asking if we have an earnings report released or posted. The presentation that we just showed is going to be released probably by tomorrow and send the link; the latest you guys are going to see those things on Monday, that would be part of the thank you. That would be also a press release followed by the thank you.

Operator, Operator

Ronny Yakov, CEO

Okay. With this, I would conclude. Thank you everyone for being on the call. Stay tuned for the earnings. We’re really excited about the business. I’d point out that the share price, we have some considerations internally that we’re going to do some sort of share buyback in this respect or insiders buyback. Thank you, everyone.

Patrick Smith, CFO

Thanks for your time. Have a great day.