OLB GROUP, INC. - Quarter Report: 2008 September (Form 10-Q)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act Of 1934

For The Quarterly Period Ended September 30, 2008

Commission File Number: 0-52994

THE OLB GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware		13-4188568
(State of jurisdiction of Incorporation)		(I.R.S. Employer Identification No.)

1120 Avenue of the Americas, Fourth Floor New York, NY		10036
(Address of Principal Executive Offices)		(Zip Code)

(212) 278-0900

(Registrant's telephone number)

Not Applicable

(Former name, address and fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

As of November 10, 2008, the Company had a total of 44,282,832 shares of Common Stock outstanding.

The OLB Group, Inc.

FINANCIAL STATEMENTS

September 30, 2008 and December 31, 2007

CONTENTS

Balance Sheets	3

Statements of Operations	4

Statement of Stockholders’ Equity (Deficit)	5

Statements of Cash Flows	6

Notes to the Financial Statements	7

The OLB Group, Inc.

Balance Sheets

ASSETS

	September 30,		December 31,
	2008		2007
	(Unaudited)
CURRENT ASSETS
Cash at the bank	$	362	$	2,333
Petty cash		-		-
Prepaid expenses		63,332		95,833

TOTAL CURRENT ASSETS		63,694		98,166

OTHER ASSETS
Internet domain		4,965		4,965

TOTAL ASSETS	$	68,659	$	103,131

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

	September 30,			December 31,
	2008			2007
	(Unaudited)
CURRENT LIABILITIES

Cash overdraft	$	20		$	-
Accounts payable and accrued expenses		173,328			186,527
Loan payable - officer		59,049			-
Accrued salary		137,500			-
Judgment payable with accrued interest		179,554			172,627

TOTAL CURRENT LIABILITIES		549,451			359,154

STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding		-			-
Common stock, $0.01 par value; 200,000,000 shares authorized,		-			-
44,282,832 and 43,691,067shares issued and outstanding, respectively		442,830			436,912
Additional paid-in capital		10,473,321			10,370,639
Accumulated deficit		(11,396,943	)		(11,063,574	)

Total Stockholders’ Equity (Deficit)		(480,792	)		(256,023	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (Deficit)	$	68,659		$	103,131

The accompanying notes are an integral part of these financial statements.

The OLB Group, Inc.

Statements of Operations

(Unaudited)

	For the Nine Months						For the Three Months
	Ended September 30						Ended September 30
	2008			2007			2008			2007

NET REVENUES	$	-		$	-		$	-		$	-

OPERATING EXPENSES

Officer’s salary		200,000			187,500			68,750			62,500
Other general
& administrative expenses		128,137			1,152,718			15,409			185,273

Total operating expenses		328,137			1,340,218			84,159			247,773

Loss from operations		(328,137	)		(1,340,218	)		(84,159	)		(247,773	)

OTHER INCOME (EXPENSE)
Interest expense		(5,232	)		(5,232	)		(1,744	)		(1,744	)

Total Other Income (Expense)		(5,232	)		(5,232	)		(1,744	)		(1,744	)

NET LOSS	$	(333,369	)	$	(1,345,450	)	$	(85,903	)	$	(249,517	)

BASIC LOSS PER SHARE	$	(0.01	)	$	(0.03	)	$	(0.00	)	$	(0.01	)

BASIC AND DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING		44,119,509			39,304,670			44,282,832			40,696,620

The accompanying notes are an integral part of these financial statements.

Statements of Shareholders’ Equity (Deficit)

	Common Stock				Additional
					Paid In		Accumulated
	Shares		Amount		Capital		Deficit

Balance at, December 31, 2006		35,300,506		353,006		8,592,018		(9,385,744	)

Issuance of common stock for cash		44,000		440		10,560		-

Issuance of common stock
to convert accrued salaries and loans to equity		2,060,534		20,605		263,965		-

Issuance of common stock for services		6,195,027		61,951		1,486,806		-

Issuance of common stock to convert warrants to equity		91,000		910		17,290		-

Net Loss for the year ended December 31, 2007		-		-		-		(1,677,830	)
Balance at, December 31, 2007		43,691,067	$	436,912	$	10,370,639	$	(11,063,574	)

Issuance of common stock for services (unaudited)		100,000		1,000		24,000		-

Issuance of common stock
to convert accrued salaries and loans to equity (unaudited)		491,765		4,918		78,682		-

Net Loss for the 9 months Ended September 30, 2008 (unaudited)		-		-		-		(333,369	)
Balance at, September 30, 2008 (unaudited)		44,282,832	$	442,830	$	10,473,321	$	(11,396,943	)

The accompanying notes are an integral part of these financial statements.

The OLB Group, Inc.

Statements of Cash Flows

(Unaudited)

	For the Nine Months
	Ended September 30,
	2008			2007

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss	$	(333,369	)	$	(1,345,450	)
Adjustments to reconcile net loss to net cash (used in)
operating activities:
Stock issued for services		25,000			1,098,756
Changes in assets and liabilities:
Decrease in prepaid expenses		32,501			-
Increase in accounts payable & accruals		56,228			12,191
Increase in accrued salary		137,500			187,500

Net cash used in operating activities		(82,140	)		(47,003	)

CASH FLOWS FROM INVESTING ACTIVITIES		-			-

CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) to cash overdraft		20			(3,460	)
Stock issued for cash		-			11,000
Repayment of loan - officer		(5,500	)		-
Proceeds from loans - officer		85,649			40,804

Net cash provided by financing activities		80,169			48,344

NET INCREASE (DECREASE) IN CASH		(1,971	)		1,341
CASH – BEGINNING OF PERIOD		2,333			200

CASH – END OF PERIOD	$	362		$	1,541

CASH PAID FOR:

Interest	$	-		$	-
Taxes	$	7,192		$	2,145

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES
Stock issued for services and prepaid expenses	$	108,599		$	1,161,256
Stock issued in conversion of accrued expenses and other debt	$	-		$	228,305

The accompanying notes are an integral part of these financial statements.

The OLB Group, Inc.

Notes to the Financial Statements

September 30, 2008 and December 31, 2007

NOTE 1 - BACKGROUND

The unaudited financial statements have been prepared by The OLB Group, Inc. (the “Company”), pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments), which are, in the opinion of management; necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements and footnotes for the year ended December 31, 2007 included on the Company’s Form 10-KSB. The results of the nine months ended September 30, 2008 are not necessarily indicative of the results to be expected for the full year ending December 31, 2008.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity date of three months or less from the date of purchase to be a cash equivalent.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentration of credit risk, consist of accounts receivable and cash deposits. The Company maintains cash with various major financial institutions. The Company performs periodic evaluations of the relative credit standing of these institutions. To reduce risk, the Company performs credit evaluations of its customers and maintains reserves for potential credit losses.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates

Income Taxes

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.

The OLB Group, Inc.

Notes to the Financial Statements

September 30, 2008 and December 31, 2007

Recent Accounting Pronouncements

FASB 159 – Fair Value Option for Financial Assets and Financial Liabilities

FASB 141 (revised 2007) Business combinations

FASB 162, “The Hierarchy of Generally Accepted Accounting Principles” (FAS 162).

The adoption of the above pronouncements is not expected to have a material impact on our financial condition or results of operations.

NOTE 3 - RELATED PARTY TRANSACTIONS

In February 2004, the Company entered into an employment agreement with its founder and President that expires on February 28, 2009. The agreement provides for an annual salary of $250,000 plus fringe benefits and an incentive bonus based on the achievement of certain performance criteria. During 2007 the company converted $284,570 of accrued salary and loans owed to the Company’s President into 2,060,534 shares of common stock.

During the first three months of 2008 the company converted $83,600 of accrued salary and loans into 491,765 shares of common stock.

On February 20, 2008 the company extended the employment agreement with its founder and president for another 5 years commencing April 1, 2008 that expires on February 28, 2014. The agreement provides for an annual salary of $275,000 plus fringe benefits and an incentive bonus based on the achievement of certain performance criteria. The employment agreement also includes a covenant not to compete with the Company for a period of one (1) year after employment ceases as to the renewal of this agreement.

NOTE 4 - GOING CONCERN

The financial statements are presented on the basis that the Company is a going concern. A going concern contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time. The Company has incurred significant losses from operations, and has a working capital deficit of approximately $485,757 which together raise substantial doubt about its ability to continue as a going concern. Management is presently pursuing financing and investment opportunities with investment bankers and private investors. The ability of the Company to achieve its operating goals and to obtain such additional finances, however, is uncertain. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.

Forward-Looking Statements

The information in this report contains forward-looking statements. All statements other than statements of historical fact made in 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. Our actual results may differ significantly from management’s expectations.

The following discussion and analysis should be read in conjunction with our 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.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of financial statements require management to make estimates and disclosures on the date of the financial statements. On an on-going basis, we evaluate our estimates including, but not limited to, those related to revenue recognition. We use authoritative pronouncements, historical experience and other assumptions as the basis for making judgments. Actual results could differ from those estimates. We believe that the following critical accounting policies affect our more significant judgments and estimates in the preparation of our financial statements.

Revenue Recognition.

The Company has had no revenues from operations since inception. Revenues will be recognized when title and risk of loss transfers to the customer and the earnings process is complete. In general, title passes to our customers upon the customer's receipt of the merchandise. Revenue is accounted for in accordance with Emerging Issue Task Force Issue No. 99-19, reporting revenue gross as a principal versus net as an agent. Revenue is recognized on a gross basis since our company has the risks and rewards of ownership, latitude in selection of vendors and pricing, and bears all credit risk. Our company records all shipping and handling fees billed to customers as revenues, and related costs as cost of goods sold, when incurred, in accordance with Emerging Issue Task Force Issue No. 00-10, accounting for shipping and handling fees and costs.

Allowance for Doubtful Accounts.

Currently we have no accounts receivable. We are required to make judgments based on historical experience and future expectations, as to the realizability of our accounts receivable. We make these assessments based on the following factors: (a) historical experience, (b) customer concentrations, customer credit worthiness, (d) current economic conditions, and (e) changes in customer payment terms.

Overview.

We are e-commerce service provider, which enables a business desiring to sell goods and services on the internet to utilize the our e-commerce resources and support services, thus creating economies of scale and cost efficiencies for e-commerce sellers throughout the entire e-commerce process.

The products that we plan to distribute over the next year and will account for most of our business are as follows:

	·	ShopFast PC
	·	ShopFast DSD

There are a number of trends in the eCommerce/direct response marketing industry, the most significant of which is the trend toward integrated marketing strategies. Integrated marketing campaigns involve not only advertising, but also sales promotions, internal communications, public relations, social networking, and other disciplines. The objectives of integrated marketing are to promote our products and services,

Price is no longer the sole motivator of purchasing behavior for our potential customers. With the availability of similar products from multiple sources, customers are increasingly looking for distributors who provide a tangible value-added to their products. As a result, we provide a broad range of products and related services. Specifically, we will provide research and consultancy services, artwork and design services, and fulfillment services to our customers. These services will be provided in-house as well as outsourced by our current suppliers.

We can provide no assurances that our expectations described above will be realized.

Recently Issued Accounting Pronouncements.

During the year ended December 31, 2007 and in 2008, the Company adopted the following accounting pronouncements which had no impact on the financial statements or results of operations:

FASB 159 – Fair Value Option for Financial Assets and Financial Liabilities

FASB 141 (revised 2007) Business combinations

FASB 162, “The Hierarchy of Generally Accepted Accounting Principles” (FAS 162).

The adoption of the above pronouncements is not expected to have a material impact on our financial condition or results of operations.

Liquidity and Capital Resources.

We anticipate that our future liquidity requirements will require a need to obtain additional financing. The Company’s primary sources of funding to date consists of loans from its Chief Executive Officer and principal stockholder, Ronny Yakov. Although Mr., Yakov has provided financing in the past, he has no binding commitment to continue such financing. We may not be able to obtain such additional financing or, if obtained, such financing may not be available and/or not be on terms favorable to us.

PLAN OF OPERATION.

Our plan of operation is to launch the marketing of the software component of our ShopFast PC product by the end of the fourth quarter of fiscal 2008, to produce a 30 minute infomercial to promote this product, as well as short form two minute commercials after completing the longer infomercial, depending on the funds available to the Company for such purposes. We intend to run the advertisements for a period of time and to use focus groups to determine the prices at which we can obtain the highest level of reseller orders and then to launch a full scale media campaign. If the ratio of media spending to product orders is at least $1.50 return in orders on $1.00 spent on advertising, we would continue such advertising. Otherwise, we would consider alternatives to the advertising methods tried. After adjustments to the marketing plan and getting a satisfactory return rate on the media expenditures, we intend to launch a nationwide television distribution campaign.

Over the next twelve months, we do not expect to purchase or sell any significant equipment. We are currently redesigning ShopFast PC so that the Internet Storefront can be created by a client having limited computer expertise without our assistance. In previous versions of ShopFast DSD, the Internet Storefront would have had to have been created by an administrator employed by us. We are redesigning ShopFast PC so that the client can create the Internet Storefront on the client’s own, in the following five steps:

Step 1: Choose the categories of items to be sold on the store.

Step 2: Design the store by choosing layouts, fonts, colors and a logo.

Step 3: Personalize the store by adding descriptive text

Step 4: Account information to facilitate payments for the store subscription as well as payment of commissions

Step 5: Final store confirmation and immediate store generation.

If we successfully test our ShopFast PC product, we are planning to develop or acquire additional products to complement our e-commerce products. We anticipate that we will also need to make expenditures in the following areas: to expand our existing ecommerce platform and replace some of the existing hardware and servers to service the volume of transactions we anticipate and to add more marketing and administrative personnel, although our initial plan is outsource significant services to third party providers. The additional products to be developed and/or acquired have not yet been identified, but are expected to be the result of requests by clients and/or their customers for additional functionality, services, payment methods and/or product availability.

We are currently in the quality assurance testing phase for our re-developed ShopFast DSD software, which is based on a different design platform than the prior versions, allowing it to operate faster and under all computer operating systems that can fully support Internet Explorer 5.0 or higher. ShopFast DSD will have be a customized product to the needs of the particular clients. The immediately prior paragraph is also applicable to the successful testing of our re-developed ShopFast DSD product.

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Some of the information in this prospectus contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as "may," "expect," "anticipate," "believe," "estimate" and "continue," or similar words. You should read statements that contain these words carefully because they:

·	discuss our future expectations;

·	contain projections of our future results of operations or of our financial condition; and

·	state other "forward-looking" information.

We believe it is important to communicate our expectations. However, there may be events in the future that we are not able to accurately predict or over which we have no control. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under "Risk Factors," "Business" and elsewhere in this prospectus. See "Risk Factors."

OVERVIEW

We are an e-commerce service provider engaged in the development of software products and other services designed to help businesses sell products over the internet. We are currently developing two software products: ShopFast Direct Shopping Database™ (“ShopFast DSD”), and ShopFast Profit Center™ (“ShopFast PC”). Each of these software products enables the user of the software to create an internet website from which such user can sell products located on a database maintained by us (the “OLB Database”).

RESULTS OF OPERATIONS - THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AS COMPARED TO THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative ("G&A") expenses decreased by $1,024,581 or 89% to $128,137 for the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007. For the three months ended September 30, 2008 as compared to the three months ended September 30, 2007 expenses decreased by $169,864 or 92% to $15,409 this decrease in G&A expenses was the result of a decrease in professional fees and services for the software development.

NET LOSS

Net loss decreased by $1,012,081 to $333,369 for the nine months ended September 30, 2008 as compared to nine months ended September 30, 2007. Net loss decreased by $163,614 to $85,903 for the three months ended September 30, 2008 as compared to three months ended September 30, 2007. This decrease in net loss was the result of the decrease in G&A expenses for professional fees & software development.

LIQUIDITY AND CAPITAL RESOURCES

During the nine months ended September 30, 2008, the Company used $82,140 of cash for operating activities, as compared to $47,003 cash used through nine months ended September 30, 2007. The increase in the use of cash was for operating expenses and professional services related to public company compliance.

Cash provided from financing activities during the nine months ended September 30, 2008 was $80,169 as compared to $48,344 through nine months ended September 30, 2007. Our capital needs have primarily been met from the loans from our president.

Our financial statements as of the nine months ended September 30, 2008 have been prepared under the assumption that we will continue as a going concern through December 31, 2008. Our independent registered public accounting firm has issued their report that included an explanatory paragraph expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available. Our ability to continue as a going concern ultimately is dependent on our ability to generate a profit which is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies and, ultimately, to achieve profitable operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

PLAN OF OPERATION AND FINANCING NEEDS

We are engaged in developing eCommerce software.

Our plan of operation within the next twelve months is to utilize our cash balances to continue research and development of our software. We believe that our current cash and investment balances will be sufficient to support development activity and general and administrative expenses for the next twelve months. Management estimates that it will require additional cash resources during 2008, based upon its current operating plan and condition. We will be investigating additional financing alternatives, including equity and/or debt financing. There is no assurance that capital in any form would be available to us, and if available, on terms and conditions that are acceptable. If we are unable to obtain sufficient funds during the next twelve months, we may be forced to reduce the size of our organization, which could have a material adverse impact on, or cause us to curtail and/or cease the development of our products.

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS:

As of the filing date of this Form 10-Q, we are not a party to any pending legal proceedings.

ITEM 2.

CHANGES IN SECURITIES.

(a) For the three months ended September 30, 2008 there were no sales of unregistered securities.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.

SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS:

Not applicable.

ITEM 5.

OTHER INFORMATION:

Not applicable

ITEM 6.

EXHIBITS:

Except for the exhibits listed below as filed herewith or unless otherwise noted, all other required exhibits have been previously filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934 on Form 10-SB, as amended (file no.0-52994).

Exhibit Number		Description

2.1		Certificate of Incorporation
2.2		Bylaws
2.3		Certificate of Merger between The OLB Group, Inc. and OLB.com (On-Line Business)
3.1		Common Stock Certificate
3.2		Warrant Agreement, issued by The OLB Group, Inc. to Ronny Yakov
10.1		Employment Agreement effective March 1, 2004 between The OLB Group, Inc. and Ronny Yakov
10.2		Fulfillment and Distribution Agreement, dated January 19, 2006, between the OLB Group, Inc. and Baker & Taylor Fulfillment, Inc.
10.3		Settlement and Merger Agreement dated as September 27, 2004, between OLB.com (on-Line Business) and MetaSource Group, Inc.
11		Statement re: Computation of per share earnings (1)
31.1		Rule 13a-14(a) Certification – Chief Executive Officer *
31.2		Rule 13a-14(a) Certification – Interim Chief Financial Officer *
32.1		Section 1350 Certification – Chief Executive Officer *
32.2		Section 1350 Certification – Interim Chief Financial Officer *

(1) Reference is made to Registrant’s Statements of Operations contained in the Financial Statements included in this Report on Form 10-QSB.

* Filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	THE OLB GROUP, INC.

Date: November 10, 2008	By:	/s/ Ronny Yakov
		Ronny Yakov
		President, Chief Executive Officer and Interim Chief Financial Officer