OLB GROUP, INC. - Annual Report: 2011 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-K

For the fiscal year ended December 31, 2011

OR

For the transition period from _______________ to ____________________

Commission file number 000-52994 

THE OLB GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)

1120 Avenue of the Americas, 4th flr New York, NY 10036

(Address of Principal Executive Offices with Zip Code)

Registrant’s telephone number, including area code (212) 278-0900

Securities registered pursuant to Section 12(b) of the Act:      None.

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.01 par value

Title of Class

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act.

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 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.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained  herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K.

Indicate by check mark if whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated file or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates, computed by reference to the average bid and asked price of such common equity as of June 30, 2011, was approximately $621,669.

As of March 5, 2012, there were 7,155,548 shares of the issuer’s common stock outstanding.

THE OLB GROUP, INC.

TABLE OF CONTENTS 

PART I.

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements of The OLB Group, Inc. included in this Report, including matters discussed under the captions “Legal Processing” in Part I, Item 3 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 are “forward-looking statements.”  These forward-looking statements generally are based on our best estimates of future results, performances or achievements, based upon current conditions and assumptions. Forward-looking statements may be identified by the use of forward-looking terminology such as “may,” “can,” “could,” “project,” “expect,” “believe,” “plan,” “predict,” “estimate,” “anticipate,” “intend,” “continue,” “potential,” “would,” “should,” “aim,” “opportunity” or similar terms, variations of those terms or the negative of those terms or other variations of those terms or comparable words or expressions. These risks and uncertainties include, but are not limited to:

You should carefully consider these risks, uncertainties and other information, disclosures and discussions which contain cautionary statements identifying important factors that could cause actual results to differ materially from those provided in the forward-looking statements.  The OLB Group, Inc. undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

History

We were incorporated in the State of Delaware on November 18, 2004 for the purpose of merging with OLB.com (On-line Business), Inc., a New York corporation incorporated in 1993 (“OLB.com”). The merger was done for the purpose of changing our state of incorporation from New York to Delaware.

As a result of the merger, we acquired all of the assets of OLB.com, including its intellectual property. In connection with the merger, each of the former common and preferred stockholders of OLB.com received five shares of our common stock in exchange for each outstanding share of OLB.com common and preferred stock and, in addition, the former holders of the Series A stock of OLB.com received one warrant for each such preferred share and the former holders of the Series B Preferred Stock of OLB.com received two warrants for each such preferred share, to purchase shares of our common stock. An aggregate of 1,345,098 shares of common stock were issued in connection with the merger.

We are authorized to issue 200,000,000 shares of common stock, par value $0.0001 per share, and 50,000,000 shares of preferred stock, par value $0.01 per share. We currently have 7,155,548 shares of common stock issued and outstanding. No shares of preferred stock are currently outstanding.

Our Business

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.

Our Products

We developed two software products: ShopFast Direct Shopping Database (TM) (“ShopFast DSD”), and   ShopFast Profit Center   (TM) (“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”).

Throughout this Form 10-K, our “client” refers to the person who purchases and uses either ShopFast DSD or ShopFast PC. Whenever we refer to the “purchase” or “purchase price” of ShopFast DSD or ShopFast PC, as with almost all other software on the market, we are referring to the purchase of a license to use the software.

Initially, our business will be dependent on a limited number of suppliers engaged in competitive businesses such as sales of books, music, video, and audio products and we currently have only one agreement and arrangement with one supplier, Baker & Taylor Fulfillment, Inc, (“B&T”), for the above products. The Company will need to enter into additional agreements with other supply companies in order to expand the lines of products available on the OLB Database. If the Company is successful in negotiating such additional supply agreements, of which there can be no assurance, the  OLB Database, as and if operations grow, could expand to eventually contain a “virtual inventory” of over three million products, including computer and office supplies, electronic products, sports apparel, compact discs, books, fine Belgian chocolates, flowers, cosmetics, beauty products, and fragrances. We characterize as “virtual” the inventory of the products to be contained on our OLB Database because such products will be supplied by third-party suppliers, not us. Throughout this Form 10-K, “supplier” means the person who provides the products ordered from the OLB Database. We do not own the products found on our OLB Database, and we do not carry any inventories of such items. We do not have a warehouse or any warehouse employees. We will depend on suppliers to fulfill the orders for any products purchased from the OLB Database.

As further discussed below, ShopFast DSD is a collection of software programs that are packaged together into what is known as a software suite. ShopFast DSD enables a client to create a customized website, pursuant to any of our client’s specifications, for the sale of products from the OLB Database. We will work together with our client to customize such website to include our client’s logos, desired design layout, and any other desired features.

In addition to our ShopFast products we offer an extended service which allows our customers to obtain health-related discount benefit plans which are included as part of the ShopFast program. These healthcare insurance programs are generally renewable monthly and include elements sold through contracts with third-party providers.

ShopFast PC is also a software suite. ShopFast PC enables our client to create on its own a standard website pre-designed by us for the sale of products from the OLB Database. Our client may choose from a selection of our pre-designed logos, design layouts, and color schemes for the website. Further, our client may personalize certain of the information on the website, by adding the client’s name, slogan, and other information about the client.

Throughout this Form 10-K, “Internet Storefront” means the individual website that is created for the use of each of our clients using either ShopFast DSD or ShopFast PC for the sale of products from our OLB Database. As an additional service provided to our clients, we will host the Internet Storefronts. This means that the website will be placed on our server, which is simply a computer connected to the internet for the purpose of serving up web sites which people can access from the internet. We will provide an internet address for the Internet Storefront, which can be personalized by the client. For example, if the client’s company name is “Rick’s Books”, then the internet address can be personalized as http://rickbooks.shopfast.com.

With either software program, once our client’s Internet Storefront is established, our client can sell the products contained on our OLB Database to visitors to that client’s Internet Storefront. Throughout this document, “client’s customer” means the person who purchases products from our client’s Internet Storefront. As further discussed below, our clients will earn a commission on sales made from their Internet Storefronts, and we will retain any remaining profits. In addition, both ShopFast DSD and ShopFast PC enable the client to create various reports summarizing information such as sales, profits, and number of visitors to the Internet Storefront.

As additional services to our clients, we will process the orders made on the Internet Storefronts. A typical order will be processed as follows: The client’s customer will place the order on the Internet Storefront and pay for it by providing his or her credit card information on the Internet Storefront. Upon the placement of an order, we will automatically receive a copy of the order electronically, and the funds from the credit card payment will be paid from the credit card company directly to us. We will then purchase the ordered products from the appropriate suppliers and arrange for them to be delivered directly by the supplier to the client’s customer. We will also send an e-mail to the client’s customer confirming that the order has been placed and providing the approximate date that the order will be shipped. The supplier will thereafter provide us an invoice for the products purchased, which we will pay in accordance with its terms. We will also pay to our client a commission on the products sold, which commission will be paid once a month with respect to all products sold by such client during the preceding month. Any remaining profits will be retained by us.

We intend to formally launch the promotion of our ShopFast PC software beginning in the second quarter of 2012 and our ShopFast DSD shortly thereafter, depending on the availability of the funds available to the Company for such purposes.

Potential Markets

We intend to generate revenues from the following sources:

Since ShopFast DSD will be customized for each client, we will negotiate with each client the purchase price of the ShopFast DSD software, the related services we provide, and the commission payable to our client on sales made by such client. The purchase price of the ShopFast PC software and the related services we provide will be standard for all our clients and not subject to negotiation. The purchase price of the ShopFast PC software is expected to be between $19.95 and $59.95. The price will be set as the product is introduced and may increase or decrease in the future depending on, among other things, the reception of the product, improvements to the product and any competing products that may be introduced into the market place in the future. The continuing services we provide, including maintenance of our OLB Database and the processing of orders placed for products from our OLB Database, will be made available for an additional monthly fee, ranging from a minimum of $9.95 to up to $49.95, depending on the level of services requested by the client, which fee might also be adjusted in the future based on marketplace conditions for such services. The commission that we will pay to a client using ShopFast PC will be a percentage of the gross revenues generated by such client with respect to each type of product. The specific amount of such percentage, depending on the type and price of the product sold, can range from 2.5% to 60%. 

Growth through Acquisition

As part of our business strategy, we intend to acquire complementary businesses. Our management believes that we can achieve profitability if, in addition to generating revenues based on sales of our software products, related services provided to our clients and our profit from sales to customers by our clients, we also acquire complementary businesses. The Company expects, based on the prior experience of the Company’s predecessor that the Company may have a negative cash flow for the first six to nine months after it commences operations, but there can be no assurance that prior experience will be correct and that such period may not be longer or shorter. There can be no assurance that any such acquired businesses will ever be profitable, If such acquired businesses were not profitable at the time of acquisition, the Company, if management’s assessment of the business potential proved correct, would expect such businesses to experience a negative cash flow for not less than from six to nine months from acquisition, which could materially affect the operations of the Company and cause it to continue to incur financial losses for an indefinite period of time. The Company may not be able to make acquisitions in the future and any acquisitions we do make may not be successful. Any such future acquisitions may also have a material adverse effect upon our operating results, particularly in periods immediately following the Consummation of those transactions while the operations of the acquired businesses are in the process of being integrated with and into our then current operations. The Company has entered into discussion with several companies, and has been in contact with, several potential targets for such future acquisitions. While the Company intends to exert substantial efforts to acquire complementary businesses, in the event the Company is not successful in acquiring complementary businesses, the Company may determine that it is in the best interests of the Company to commence to develop complementary products to its software products and/or incorporate additional functionality into newer versions of its current software, while still pursuing possible acquisitions.

The Company intends to initially evaluate such potential targets for acquisition based upon the concept of determining the cost of such acquisition based upon the cost of developing and implementing the software, services and/or customer base independently of such an acquisition. There can be no assurance that Management’s evaluation will prove to be correct following such acquisition or independent development.

In connection with any such acquisition, the company anticipates that it will acquire such target by a purchase price of company Stock or a combination of stock and cash. In the event that a cash component is included, the company anticipates that it will have to finance the cash portion of the purchase price. There can be no assurance that the Company will be able to obtain such financing on terms acceptable to the Company.

Industry Overview

An e-commerce service provider enables a business desiring to sell goods and services on the internet, also known as an e-commerce seller, to utilize the service provider’s established e-commerce resources and support services, thus creating economies of scale and cost efficiencies throughout the entire e-commerce process.

Infomercial Sales

We initially intend to market our products through the use of “infomercials.” The Company’s largest competitor, as well as others, uses the “infomercial” as their primary marketing format.

Selling products through "Infomercials" (direct response television sales - "DRTV") can serve as a profitable sales tool for appropriate products. According to Forbes Magazine, an estimated sixty three percent (63%) of Americans over the age of sixteen had purchased products after viewing an Infomercial program.

A company's startup situation hinges on the success of the initial products' testing periods. These test periods may last for six months each, with positive results being used to refine and enhance the product "show," and negative results (a product that does not test well early on) leading to the early abandonment of the product. Only successfully-tested product Infomercials will be further refined and broadcast in a full-scale media campaign.

The industry has made significant strides in overcoming negative public perception. Major corporations such as Apple, Sony, and Gateway use the sales channel as part of their overall marketing campaigns. Production quality has also improved in the past few years, resulting in viewers who perceive infomercial and direct response television as entertainment.

DRTV remains subject to negative public perception, and it can be a challenging and costly proposition. There remain incidents of DRTV production organizations requiring the manufacturers or owners of the products to pay for not only the cost of the goods, but also all of the production costs of a "test" infomercial, including legal compliance, talent, equipment rentals, production crews, location costs and other production fees and expenses, while declining to run the infomercial.

As a sales channel, DRTV is enjoying substantial growth. At the same time, consumers are overwhelmed with the high number of direct response programs currently airing, which viewers often perceive as annoying `paid advertising' programs. Media buyers jockey for coveted airtimes that produce high returns. These combined forces create a challenging environment for DRTV product developers. In spite of the challenges, the DRTV sales channel can return excellent profits for products that test well and meet the sales channel's tough requirements for success.

Growth rates for the electronic direct response industry (TV, radio and internet) have been quite strong, driven by deregulation, the proliferation of cable channels in the mid -1980's and the growth of the internet.

Infomercials are aired on national cable networks and local broadcast stations in all 212 broadcast markets nationally. The programs use sophisticated motivational techniques that drive viewers to immediately purchase the product through a Call-To-Action (“CTA”), usually in the form of a toll-free telephone order number. A typical presentation sequence in the program is: product introduction; product demonstration; customer testimonials; followed by a Call-To-Action (CTA). Quite often the viewer is provided with additional motivation to order the product through the use of product up-sells (...'but   wait, there's more'.).   The carefully crafted message cultivated by the program is intended to develop the viewer's sense of immediately   needing the product, causing the viewer to react to the Call-To-Action. The desired result is the viewer's impulse buy of the product.

DRTV can be a cost-effective sales channel for delivering a product's message to a large number of viewers. A 1 % response rate to the CTA is considered typical. The total number of viewers watching the program, multiplied by multiple broadcast markets airing the program, can generate substantial calls even at just a 1% response rate. The channel closes a lower percentage of sales (generally 25%) compared to traditional one-on-one sales techniques, but reaches a mass audience that can allow tremendous economies of scale and high margin returns. Advertisers are turning to DRTV because the payback is much faster than that of traditional broadcast advertising.

Broadcast markets in Europe, Latin America, and Asia also represent an opportunity for DRTV sales, providing additional markets for extending the product's lifespan. While still generating sales in national DRTV and retail sales channels, a product can be tested and adapted for placement in international channels, generally in the order of Canada, Australia, Great Britain, France, Germany, Japan and China.

Infomercial advertising campaigns can build brands inexpensively, while creating a pent up demand for eventual retail rollout. The most costly expenditure in an infomercial campaign is that of buying airtime. Paying for airtime has two effects. Buying media airtime generates immediate sales from each airing of the infomercial. Just as importantly, brand awareness is quickly built through the airings, allowing the company to create a widely recognizable brand name for the product and the company. The infomercial marketing arena is often used as a product's introductory sales channel, effectively building brand awareness prior to rolling the product out into retail channels. When brand-name identification of a product is established through DRTV and other marketing methods, even greater income can be generated through product sales at retail and in foreign countries.

Infomercial Distribution

The three major types of media distribution are National Cable, Broadcast, and Satellite. Distributors sell blocks of airtime for infomercials in 30-second, 60-second, 120-second, 2-minute, and 30-minute increments (actually 28.5 minutes). The shorter time blocks are called 'short-form' and 'spots', the 30-minute blocks are called 'long-form'. Generally, infomercial products with higher prices and margins are appropriate for more expensive 30-minute blocks. A higher priced product generally requires more time to explain the benefits to the customer. A 30-minute timeslot offers a greater opportunity to educate customers about a product's benefits, and motivate that customer to place an order.

The long-form category is highly competitive. Not only do products compete against similar products in their categories, but each infomercial competes against all other infomercials airing in the same timeframe, regardless of category.

Principal Industry Factors

The principal competitive factors in our market are brand recognition, selection, personalized services, convenience, price, accessibility, customer service, quality of search tools, quality of site content, reliability and speed of fulfillment.

We believe that our products will offer the following competitive advantages to clients:

Flexibility: Our flexible platform will allow for more customized solutions for clients.

Categories: We will provide financial service companies with direct debit capability for their customers.

Operating cost: Low cost resources, no warehouse, all fulfillment and customer service are outsourced.

Experience: We have processed over 250,000 e-commerce orders for resellers in the past, during the period during which we marketed our original ShopFast DSD Software.

Our Strategy

E-commerce is one of the fastest growing sales channels in the history of business, with U.S. online revenues predicted to grow from $172B in 2005 to $329B in 2011, according to Forrester Research. Consumer adoption of e-commerce continues at such a rapid pace that its overall growth remains strong and far outpaces more mature brick-and-mortar sales.

Because of the rapid growth of internet shopping, both existing and new businesses must consider establishing an on-line business presence to broaden their appeal to potential customers. Additionally, a growing percentage of both existing businesses and new businesses are exclusively focused online.

We will be primarily targeting:

We believe that our business strategy offers the following advantages over traditional e-commerce:

Infomercial Marketing of Our Products

We plan to produce a 30 minute infomercial to promote this product, as well as short form two minute commercials after completing the longer infomercial. 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.

Customers

The company completed its final development of its ShopFast PC software and has substantially completed its quality assurance process. In the fourth quarter of 2008, the Company began accepting a small number of paid subscribers in connection with the evaluation and completion of its quality assurance process. The Company plans to complete all phases of its quality assurance process and expand marketing of its ShopFast PC software in the second quarter of 2012, depending on the funds available to the Company for such marketing efforts.

The Company’s limited quality assurance process test marketing of the ShopFast PC software has been conducted primarily through a telemarketing sales organization wherein independent distributors establish their own network of associates.

Competition

We will compete with a variety of other companies, including traditional stores, non-traditional retailers, such as television retailers and mail order catalogues, and a myriad of various online retailers of different sizes and financial capabilities offering both specialty and broad categories of products. Additionally our competition will include large online retailers, such as Amazon, Yahoo, eBay and half.com. Management believes our current principal competitor in the e-commerce service provider space is Monster Commerce, which markets its services primarily through infomercials.

Many of our current and potential competitors, including those mentioned in the preceding paragraph, have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources than us.

See “ Risk Factors—We are subject to significant competition and may be unable to keep up with the technology and pricing of our competition ,” for a more detailed discussion of the competitive factors to which we are subject.

Intellectual Property

The Company does not have any registered trademarks. We have obtained the domain name http://www.shopfast.com (“shopfast.com”) as well as http://www.shopfast.net (“shopfast.net”) We also have obtained the domain name http://www.olb.com, which will be utilized to provide information about the Company as well as information about its products and services. This site will not be utilized for sales of software and or product, but it is anticipated that links to such sites, when appropriate, will be provided.

The Company still maintains ownership of the domain name http://www.colorbank.com, which was utilized in connection with its prior business operations. The Company has no present plans for the utilization of this domain name.

The company intends to file for registered trademarks for its products when funds are available for that purpose. However, there can be no assurance that the Company will be successful in obtaining any such trademarks.

The company is also the sole owner of all the source code and development properties of the ShopFast software.

Employees

As of December 31, 2011, we had one full time employee, Ronny Yakov, our chief executive officer. The company utilizes outside contractors as needed for other business needs. We have no employment contracts, other than with our chief executive officer. Our employees are not affiliated with a union or affected by labor contracts. We also engage consultants from time to time on an independent contractor basis. Mr. Yakov is currently serving as our Chief Financial Officer on an interim basis. The Company is currently identifying candidates to serve as Chief Financial Officer. The candidate who is identified and hired will become an employee devoting such time as is necessary to our business for the performance of his duties.   The Company has signed a five year employment agreement with Ronny Yakov, its President and Interim Chief Financial Officer.  The agreement pays Mr. Yakov $275,000 per year plus $1,500 per month car allowance.  The agreement expires February 28, 2013.

The Company’s employee and contractor relations seem to be good. We cannot be assured of being able to attract quality employees in the future. The establishment of our business will be largely contingent on our ability to attract and retain personnel for the management team. There is no assurance that we can find suitable management personnel or will have the financial resources to attract or retain such people, if found.

Regulation

At this time, there are no federal or state certifications or other regulatory requirements applicable to our products and we are not aware of any pending federal or state legislation which would introduce regulatory requirements that would negatively impact or impede the sales and distribution of our products in the United States or elsewhere; however, our products and business practices may be subject to review by industry self-regulatory agencies and consumer affairs monitors. Actions resulting from such reviews could include, but not limited to, cease and desist orders, fines and recalls.

Our advertising is subject to review by the National Advertising Council (NAC) and our advertisements could be subject to NAC recommendations for modification. The U.S. Federal Trade Commission (FTC) and state and local consumer affairs bodies oversee various aspects of our sales and marketing activities and customer handling processes. If any of these agencies, or other agencies that have a right to regulate our products, engage in reviews of our products or marketing procedures we may be subject to various enforcement actions.

Item 1A.Risk Factors

There are numerous and varied risks, known and unknown, that may prevent us from achieving our goals, including those described below. The risks described below are not the only ones we will face. Additional risks not presently known to us or that the Company currently deems immaterial may also impair our financial performance and business operations. If any of these risks actually occurs, our business, financial condition or results of operations may be materially adversely affected. In such case, the trading price of our Common Stock could decline, and you may lose all or part of your investment. Before making any investment decision, you should also review and consider the other information set forth in this report.

You should carefully consider the following risk factors, in addition to the other information presented in this Form 10-K, in evaluating us and our business. Any of the following risks, as well as other risks and uncertainties, could harm our business and financial results and cause the value of our securities to decline, which in turn could cause you to lose all or part of your investment.

Risks Relating to Our Business – Going Concern Issues

We have incurred and will continue to incur financial losses until we are able to generate sufficient revenues from operations to offset such expenditures, and we will require additional financing, which may not be available when needed. If our business plans are not successful, we may not be able to continue operations as a going concern and our stockholders may lose their entire investment in us.

In 2010 and 2011, we incurred operating losses. The Company anticipates that it will continue to incur losses for some time. The Company’s continued existence is dependent on its ability to generate additional revenues and on obtaining additional financing from its stockholders and external sources. Accordingly, there can be no assurance that the Company will succeed in executing its plans and have all the financing necessary for its operations.

Our auditors have indicated that our past losses from operations and our working capital deficit raise substantial doubt as to our ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.

Our ability to continue as a going concern is dependent upon our generating cash flow sufficient to fund operations and reducing operating expenses. We expect to incur significant up-front expenditures in connection with our e-commerce operations, including increased expenditures relating to marketing and sales and development of web sites for new clients, which will result in continuing operating losses. While we currently expect to commence marketing our e-commerce software and services in the second quarter of 2012, we anticipate that losses will continue until we attract and retain a sufficient number of clients for our products and services and are able to generate sufficient revenues from the e-commerce websites of such clients to offset such expenditures. Historically, we have not derived positive cash flow from a web site until it has been in operation for six to nine months. Our business plans may not be successful in addressing these issues. If we cannot continue as a going concern, our stockholders may lose their entire investment in us.

Until we receive sufficient revenues from operations, if ever, we will endeavor to fund our working capital requirements by obtaining loans from Ronny Yakov, who is our largest shareholder, and third parties. Mr. Yakov is under no obligation to advance any additional sums of money to the Company and, additionally, there can be no assurance that we will be successful in obtaining such funds from third parties. We cannot assure you that we will generate revenues or positive cash flow or succeed in obtaining the financing necessary for our operations when needed and on acceptable terms, or at all. Our failure to obtain additional financing when needed will have a material adverse effect on our business, financial condition and prospects. If we cannot obtain such additional financing, our stockholders may lose their entire investment in us. We may have to limit operations during the period that we are looking for capital if we cannot obtain interim working capital loans. We may incur losses in future periods, which could reduce investor confidence and cause our share price to decline.

We expect to increase our sales and marketing expenses, research and development expenses and general and administrative expenses, and we cannot be certain that our revenues will grow at a rate sufficient to cover these costs, if at all. Accordingly, we may be unable to operate profitably, even if we develop operations and generate revenues. The Company expects, based on prior experience, that the Company may have a negative cash flow for the first six to nine months after it commences marketing efforts, which are planned to commence during the second quarter of 2012, but there can be no assurance that prior experience will be correct and that such period may not be longer or shorter. We will be dependent on a limited number of suppliers, and we currently have only one Supplier agreement and arrangement.

We anticipate that our business will be dependent on a limited number of suppliers engaged in competitive businesses such as sales of books, music, video, and audio products. We currently have only one agreement and arrangement with one supplier, Baker & Taylor Fulfillment, Inc, (“B&T”), for the above products. The Company will need to enter into additional agreements with other supply companies in order to expand the lines of products available on the OLB Database. We anticipate that, so long as we are processing orders by credit card, such additional agreements will be obtainable, although the terms of any such agreements are not expected to offer the Company direct credit or any other benefit other than that made available to other new customers of such entities with no current track record with such supplier.. Should we encounter the loss of a primary supplier, or a decline in the economic prospects or activity of such supplier, we might need to limit the listing of a product, or line of products, from the OLB Database. We also may also need to increase the delivery times for such products, resulting in losses of sales, which events could materially and adversely affect our financial condition and operating results and, consequently, our stockholders may lose their entire investment in us.

We will be dependent on third parties for fulfillment over whom we have only limited or no control.

We do not carry any inventories and do not have any warehouse employees or facilities. We will be dependent on our suppliers to fulfill customer orders and ship merchandise directly to consumers on a timely and competitive basis.

While we have only limited control over the fulfillment and shipping procedures of our suppliers, we assume the risk of product delivery upon shipment. Poor performance by our suppliers would adversely affect our business and reputation.

Our business also depends on the ability of our suppliers to provide products at competitive prices in sufficient quantities and of acceptable quality. We cannot assure that you our suppliers will continue to sell merchandise on favorable terms or that we will be able to establish new, or extend current, relationships to ensure acquisition and delivery of merchandise in a timely and efficient manner and on acceptable commercial terms.

We expect that our suppliers, similar to B&T, will limit the circumstances under which we can return products for other than erroneously shipped products, damaged products, defective products. For other types of returns, we expect a time limit similar to the 60 days imposed by B&T, as well as a “re-stocking” type charge for certain categories of returns. In addition, a penalty for excessive returns which, in the case of B&T, will be a an increase in the return processing fee to 10% of the price charged by B&T for the remainder of the term of the agreement can be expected.

 These type of agreements customarily impose a high rate of interest for failure to pay invoices timely (18% for B&T), provide no right to maintain an open account balance with the supplier, do not guarantee that products covered by the contract will always be in stock, and prices will be subject to change with little or no notice.

As, when and if, the Company increases the level of business it conducts with such suppliers, it is possible, but not assured, that the Company may be able to negotiate more favorable business terms.

We will assume certain risks of our suppliers, including the risk of loss on payment disputes.

Typically, a client’s customer will place the order on the Internet Storefront and pay for it by credit card on the Internet Storefront. Upon the placement of an order, we will automatically receive an electronic copy of the order, and we will receive the credit card funds directly from the credit card company. We will then purchase the ordered products from a supplier and arrange for direct delivery from the supplier to the client’s customer. The supplier will thereafter invoice us for the products purchased, which we will pay when due. We will also pay to our client a commission on the products sold; commission will be paid once a month with respect to all products sold by such client during the preceding month. We will retain any remaining profits, after payment of client commissions.

In the event of a customer dispute it is possible that a credit card company may charge back the purchase price of a product while we have paid the supplier for the products. The Company will have a potential for loss on such amounts if the dispute is not resolved to the customer’s satisfaction or the credit card company otherwise reverses any such charge back.

We hope to enter into additional agreements with our suppliers which will require them, as in the case with B&T, to pay us specified percentages (by product line) of total product sales offered by us over the Internet. We will recognize revenues on product sales when the product is shipped to the client’s customer by our supplier. We will recognize the amount due to a supplier (i.e., total product sales less our specified percentage) in cost of sales. In order for us to adopt this accounting policy, we will assume the risk of loss on product shipments and bear the credit risk with respect to product sales. An unanticipated delay in shipping, or substantial shipments of defective goods and/or returns could result in our absorbing the loss. If product related losses are material, our business financial condition and operating results could likely be adversely affected.

In the case of B&T, we are obligated to utilize it as our primary supplier for goods within the categories specified in the agreement, as will more likely than not be the case with other primary suppliers we may enter into agreements with. In the event of limitations on product availability from a primary supplier, there exists a risk that orders can be lost pending an alternate source of supply. We will endeavor to have agreements in place with back-up suppliers in the event that a primary supplier runs into stock and or other fulfillment problems, but no assurance can be given that back-up suppliers will always be obtainable for all offered products.

High returns of the Company’s ShopFast PC Software could lower profit margins of the Company.

We plan to initiate a “money back guarantee policy” for our ShopFast PC individual and small business customers, who we refer to as “resellers,” which will permit resellers to return this product to us within 30 days if not satisfied, which is a common return period in the industry. A materially larger number of returns could lower our margins.

 E-commerce; although well established, is not without business and security risks, and we cannot assure you of the market acceptance we require in order to become profitable.

Demand for our products and services could be negatively affected by:

If we are unable to acquire users for our services, our business will be adversely impacted, and our stockholders may lose their entire investment.

The need to transmit confidential information securely, such as credit card and other personal information, over the Internet has been a significant barrier to e-commerce. We will rely on encryption and authentication technology licensed from third parties to provide the security and authentication necessary to effect secure transmission of confidential information, such as customer credit card numbers. We cannot assure you that future advances in computer capabilities, new discoveries in the field of cryptography or other events or developments will not result in a compromise or breach of the algorithms used by us to protect customer transaction data. Any publicized compromise of security could deter people from using the web for e-commerce transactions. Such security concerns could reduce the e-commerce market, force us to incur significant cost to protect ourselves from the threat of problems caused by such security breaches, and thereby materially and adversely affect our business, financial condition and operating results.

We are subject to certain global business operation risks.

The internet allows for potential clients and their customers to be located world-wide. Sales of our products and sales to customers by our clients may be subject to different laws and regulations in effect in such jurisdictions which could impede our growth. The Company, in conjunction with its suppliers, will develop policies for where orders for products shipment destinations by customers will be accepted in order to minimize risk exposure to the Company. Any negative impact changes in trade regulation could have an effect on the areas in which the Company can successfully maintain and/or develop its client base and a client can develop its customer base.

We are dependent on our clients to operate and promote their storefronts.

Our future success will depend upon on our clients’ properly operating the ShopFast Suite system they are utilizing and to promote their storefront. The failure of the clients to do so will have a material adverse effect on all aspects of the business of the Company.

We are subject to significant competition and may be unable to keep up with the technology and pricing of our competition.

Online retail shopping is rapidly evolving and intensely competitive. We expect competition in the online commerce market to intensify in the future. Barriers to entry are minimal, and current and new competitors can launch new sites at a relatively low cost. In addition, the retail shopping industry is intensely competitive. We currently or potentially compete with a variety of other companies, including traditional stores, non-traditional retailers, such as television retailers and mail order catalogues, and other online retailers. Competitive pressures created by any one of the foregoing, or by our competitors collectively, could have a material adverse effect on us. Our competition includes a myriad of various online retailers of different sizes and financial capabilities offering both specialty and broad categories of products and, in addition, large internet retailers such as Amazon, Yahoo, eBay and half.com.

The options generally available to a retailer desiring to sell goods or services on the internet normally require a large up-front investment, lengthy development cycle and recurring maintenance and update costs for which we plan to provide a cost effective and efficient alternative to our clients. Clients who purchase and use our ShopFast DSD and ShopFast PC will not have to invest in hardware, software or staffing beyond that which is normally required for access to the internet and the web. The equipment and services required includes, an internet ready computer equipped with an operating system that fully supports Internet Explorer Version 5.0 or higher, an internet service provider with high speed service (although dial-up, while slower will operate) and a printer. Instead, other than the basic equipment listed above, they will be able to access our existing resources and will be able to use ShopFast DSD or ShopFast PC, as case may be, without having to purchase additional software or hardware. While our ShopFast DSD and ShopFast PC has been designed to be easily installed and operated by persons not having computer expertise and to offer the a quick and direct way for any business or individual to begin selling products over the Internet, we cannot assure you that we will be able to compete with our competitors.

We believe that the principal competitive factors in our market are brand recognition, selection, personalized services, convenience, price, accessibility, customer service, quality of search tools, quality of site content, reliability and speed of fulfillment. Many of our current and potential competitors, including those mentioned in the preceding paragraph, have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources than us. In addition, other on-line retailers may be acquired by, receive investments from, or enter into other commercial relationships with larger, well-established and well-financed companies as use of the Internet and other on-line services increases. Certain of our competitors may be able to secure merchandise from manufacturers and/or suppliers on more favorable terms, devote greater resources to marketing and promotional campaigns, adopt more aggressive pricing or inventory availability policies and devote substantially more resources to web site and systems development than we do. Increased competition may result in reduced operating margins, loss of market share and a diminished brand franchise. We cannot assure you that we will be able to compete successfully against current and future competitors. Competitive pressures faced by us may have a material adverse effect on business, financial condition and results of operations. We are dependent upon our proprietary technology and are subject to the risk of third party infringement claims.

Our success and ability to compete is dependent in significant part upon our proprietary software technology. We rely upon a combination of trade secret, copyright and trademark laws, nondisclosure and other contractual agreements and technical measures to protect our proprietary rights. Currently we have no patents or trademarks on file to protect our intellectual property. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or to obtain and use information that we regard as proprietary. We cannot assure that the steps taken by us to protect our proprietary technology will prevent misappropriation of such technology, and such protections may not preclude competitors from developing products with functionality or features similar to our products. In addition, effective copyright and trade secret protection may be unavailable or limited in certain foreign countries. Such royalty or licensing agreements, if required, may not be available on terms acceptable to us or at all. In the event of a successful claim of product infringement against us and our failure or inability to develop a non-infringing technology or license the infringed or similar technology our business, results or financial condition could be materially and adversely affected.

Failure of our hardware systems or system suppliers could have a material adverse effect on our business.

We will depend on third party communications providers to enable internet users to access our resellers' web sites and the ShopFast DSD website which we intend to establish when the ShopFast DSB becomes ready for sale. These web sites could experience disruptions or interruptions in service due to failures by these providers. In addition, end-users depend on Internet service providers, online service providers and other web site operators for access to these web sites. Each of these groups has experienced significant outages in the past and could experience outages, delays and other difficulties due to system failures unrelated to our systems. Material delays and system failures would adversely affect our operations and could have material adverse effect on our business, prospects and financial condition.

Our ability to successfully receive and fulfill orders and provide high-quality customer service largely depends on the efficient and uninterrupted operation of our computer and communications hardware systems linking us to our suppliers who are responsible for fulfilling such orders. We depend on such systems for receiving orders for the products included in our OLB Database and communicating with our suppliers, clients, and customers of our clients. We depend on our computer hardware systems throughout processing of an order and the related payments, and the failure of such systems will have an adverse effect on our ability to process an order efficiently

Our systems are vulnerable to damage or interruptions from fire, flood, power loss, telecommunications failures, break-ins and similar events. We presently do not have redundant systems and do not have a formal disaster recovery plan. We carry limited business interruption insurance to compensate us for losses, which may be insufficient to cover all the damages.

Our network resources may be vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering with our computer systems, leading to material interruptions, delays or cessation in service to resellers and customers. Inappropriate use of the internet by third parties could also potentially jeopardize the security of confidential information stored in the computer systems of our resellers.

We are dependent on an increased network capacity for growth and will need additional capital to expand it.

Our current hardware and software systems will enable us to process such orders for a maximum of 20,000 clients. In order to process orders for more than 20,000 clients, the Company will need to acquire additional hardware and software systems.

Our operations will depend upon the capacity, reliability and security of our network resources. We currently have limited network capacity and will be required as we grow to continue to expand our network resources to accommodate increased numbers of users and the amounts of information they may wish to access. Expansion of our network resources will require substantial financial, operational and management resources. We cannot assure that you we will be able to expand our network resources to meet potential demand on a timely basis, at a commercially reasonable cost, or at all. Our failure to expand network resources on a timely basis would have a material adverse effect on our business, financial condition and results of operations.

We have changed the focus of our business and are subject to many of the risks associated with a new business.

We, by way of our predecessor company, commenced e-commerce operations in 1997, and such predecessor discontinued its focus on the digital media services business in 1999, which was wound down and fully discontinued in 2001. Thereafter, the focus became the development and implementation of our initial introduction of ShopFast software. In 2000 we completed the original version of our ShopFast DSD software. In fiscal 2001 and 2002 the Company lacked the funds to further develop the software. In January 2003, we revised our e-commerce business plan by undertaking the redesign and redevelopment of our products and changing our marketing strategy. However, during fiscal 2003 and 2004, we were also unable to expend funds for the development of the software as the result of the inability of our merger partner to provide the Company with the promised funding in accordance with the Merger Agreement. Such redesign of our products was made for the purpose of incorporating into our previously existing products current technologies and software that is intended to make the products easier to use. In January, 2006, to aid us in redesigning and developing our ShopFast PC and ShopFast DSD products, we retained six freelance software developers, some of which are operating in India. Such software developers are responsible for ensuring that the features of our software products work properly, resolving any problems in the software, and developing any new features that we desire to add. These software developers are paid on an hourly fee basis for their services. No written agreements have been entered into with any of such software developers.

In addition to marketing to existing businesses as we had in the past, our new business plan contemplates selling our newly developed ShopFast PC product to individuals and small businesses wishing to launch e-commerce businesses. We plan to use television infomercials and other advertising venues to market our product.

We have limited experience in developing and commercializing new products and services delivered over the Internet. There is limited information available concerning the potential market acceptance of our products and services. Although we had processed approximately 250,000 orders for the purchase of products or services over the Internet in the past from 1999 to 2002, in connection with our original version of the ShopFast DSD software, such experience is limited compared to that of major internet retailers such as Amazon.com and Ebay.com.

Accordingly, we are subject to all of the risks, expenses, delays, problems and difficulties frequently encountered in the establishment of a new enterprise in an emerging and rapidly evolving industry characterized by an increasing number of new Internet products and services.

The effective execution of our business will be largely dependent upon our ability to:

We cannot assure you that we will be able to execute our business successfully, or that we will not encounter unanticipated expenses, problems or technical difficulties will result in material delays in its implementation. If we fail to implement our business plan effectively, our business, financial condition and prospects will be materially and adversely affected.

Our failure to finance operations would have a material effect on our business plan.

We cannot assure you that any delay or modification of our plans would not adversely affect our business, financial condition and results of operations.   If the Company does not develop a source additional financing the Company will continue to be dependent on possible additional financing from Ronny Yakov, our chief executive officer and principal stockholder who has provided financing in the past, but he has no binding commitment to continue such financing. We may not be able to obtain financing from other sources or, if obtained, such financing may not be on terms favorable to us.

Possible partnering with a third party for advertising and marketing, since we have a limited financial resources, could have a material adverse effect on our potential revenues.

We would consider partnering with a third party to finance the advertising and marketing of our products and with whom we would share revenues, which would result in the Company receiving a materially lower portion of the potential revenues from operations. The Company has had a preliminary telephone conversation with Advantage Direct of New York to explore possibilities. This conversation was limited to an inquiry as to whether Advantage Direct would have any general interest in partnering with respect to the Shopfast DSD and Shopfast PC products. The Company has not to date furnished a business plan nor any other information on the Company or its products to Advantage Direct. There can be no assurance that such a partnering arrangement would be available to us if we sought such an arrangement.

We are dependent on our Chief Executive Officer, the loss of whom could have a material adverse effect on us.

Our future success depends in significant part upon the continued service of Ronny Yakov, our Chairman and Chief Executive Officer. Mr. Yakov has outsourced the development of our product and the future marketing of the product to a small team of developers and personnel. Our future success depends on our ability to attract and retain highly qualified management, technical, sales and marketing personnel. Competition for such personnel is intense, and we have, at times in the past, experienced difficulty in recruiting and retaining qualified personnel. We do not carry key man insurance for Mr. Yakov.

We do not have an experienced Chief Financial Officer.

The Company does not presently have an experienced chief financial officer and Mr. Yakov, the Company’s sole director, officer and principal shareholder, is currently serving as the Company’s Chief Executive Officer, President, Secretary and Interim Chief Financial Officer and therefore may be subject to potential conflicts of interest. There are no independent directors of the Company and the Company does not have either an audit committee or a compensation committee.

We could be subject to product liability claims.

We may be subject to product liability claims if people or property are harmed by the products sold by third party resellers in connection with ShopFast PC and/or ShopFast DSD. Some of the products sold may expose us to product liability claims relating to personal injury, death, or property damage if caused by such products. Our agreements with our customers, whom we refer to as ShopFast business partners, will not typically contain provisions designed to limit our exposure to potential product liability claims. Further, any limitation of liability provisions contained in such agreements may not be effective under the laws of certain jurisdictions. Although we have not experienced any material product liability claims to date, there can be no assurance that we will not be subject to such claims. We currently do not have insurance coverage against product liability and/or errors and omissions claims and there can be no assurance that such insurance will be available to us on commercially reasonable terms or at all. A successful product liability claim of significant magnitude brought against us would have a material adverse effect on our business, prospects and financial condition.

Our business is seasonal, and quarterly operating results can be expected to fluctuate significantly.

Our revenues and operating results may vary significantly from quarter to quarter due to a number of factors. Many of these factors are outside our control and include:

Our revenue for the foreseeable future will remain primarily dependent on online user traffic levels, online sales of merchandise appearing on the websites of ShopFast DSD business partners and ShopFast PC resellers. Such future revenues are difficult to forecast. Any shortfall in revenues in relation to our expenses would have a material adverse effect on our business, prospects and financial condition. Moreover, many of our expenses are fixed in the short term and determined based on our investment plans and estimates of future revenues. We expect to incur significant new expenses in further developing our technology and service offerings, as well as in advertising and promotion to attract and retain consumers and merchants, before generating associated revenues. We may be unable to adjust our expenditures quickly enough to compensate for any unexpected revenue shortfall. For these or other reasons, our financial results in future quarters may fall below the expectations of management or investors and the price of, and long-term demand for, our shares could decline.

Our limited operating history in the e-commerce market makes it difficult to ascertain the effects of seasonality on our business. If seasonal and cyclical patterns emerge in Internet consumer purchasing, our results of operations from quarter to quarter will be less comparable. We expect sales to fluctuate in a manner similar to that of the retail brick and mortar sales industry and, accordingly, believe that our sales will peak during our fiscal fourth quarter.

Investors should not rely on quarter-to-quarter comparisons of our results of operations as indicative of future performance. It is possible that, in future periods, our results of operations may not meet expectations.

Government regulation and legal uncertainties may damage our business.

We are subject to the same foreign and domestic laws as other companies conducting business on and off the Internet. Today, there are still relatively few laws specifically directed towards online services. However, due to the increasing popularity and use of the Internet and online services, many laws relating to the Internet are currently being debated at all levels of government and it is possible that such laws and regulations will be adopted. These laws and regulations could cover issues such as user privacy, freedom of expression, pricing, fraud, content and quality of products and services, taxation, advertising, intellectual property rights, and information security. It is not clear how existing laws governing issues such as property ownership, copyrights and other intellectual property issues, taxation, libel and defamation, obscenity, and personal privacy apply to online businesses. The vast majority of these laws were adopted prior to the advent of the Internet and related technologies and, as a result, do not contemplate or address the unique issues of the Internet and related technologies. Those laws that do reference the Internet, such as the U.S. Digital Millennium Copyright Act, have begun to be interpreted by the courts, but their applicability and scope remain somewhat uncertain.

Accordingly, the laws and regulations applicable to the Internet and our business in the jurisdictions where we expect to operate are evolving. Governments may adopt new laws and regulations governing the Internet and the conduct of business on the Internet that could applicable to products included in our OLB Database and sold in connection with ShopFast PC or ShopFast DSD may differ from product to product increase our costs of doing business or limit the attractiveness of online shopping. Additionally, consumer protection and safety laws or merchant to merchant, and some products or merchants may be subject to more extensive governmental regulations than others. These laws and regulations could expose us to substantial compliance costs and liability. In response to these laws and regulations, whether proposed or in effect, as well as public opinion, we may choose to limit the types of merchants or products we will include in our OLB Database, which could, in turn, decrease the desirability of our service and reduce our revenues.

Imposition of sales and other taxes may damage our business.

The application of indirect taxes (such as sales and use tax, value added tax, or VAT, goods and services tax, business tax, and gross receipt tax) to e-commerce businesses such as our company and our clients is a complex and evolving issue. Many of the fundamental statutes and regulations that impose these taxes were established before the growth of the Internet and e-commerce. In many cases, it is not clear how existing statutes apply to the Internet or e-commerce. In addition, some jurisdictions have implemented or may implement laws specifically addressing the Internet or some aspect of e-commerce. The application of existing, new, or future laws could have adverse effects on our business.

Several proposals have been made at the U.S., state and local level that would impose additional taxes on the sale of goods and services through the Internet. These proposals, if adopted, could substantially impair the growth of e-commerce, and could diminish our opportunity to derive financial benefit from our activities. The U.S. federal government recently enacted legislation extending the moratorium on states and other local authorities imposing access or discriminatory taxes on the Internet. This moratorium does not prohibit federal, state, or local authorities from collecting taxes on our income or from collecting taxes that are due under existing tax rules. The imposition of Internet usage taxes or enhanced enforcement of sales tax laws could make online shopping less attractive to consumers, which could have an adverse affect our business, financial condition and operating results.

Our market may undergo rapid technological change and any inability to meet the changing needs of our industry might render our products obsolete and could harm our financial performance.

The markets in which we compete are characterized by rapidly changing technology, evolving industry standards, frequent new service announcements, introductions and enhancements, and changing consumer demands. We may not be able to keep up with these rapid changes. As a result, our future success depends on our ability to adapt to rapidly changing technologies, to respond to evolving industry standards and to improve the performance, features and reliability of our service. In addition, the widespread adoption of new Internet, networking or telecommunications technologies or other technological changes may require us to incur substantial expenditures to modify or adapt our service and resources, which could harm our financial performance and liquidity.

The rapid evolution of our industry makes it difficult for investors to evaluate our business prospects, and may result in significant declines in our share price.

Internet commerce has grown rapidly in recent years and consumer usage patterns have continually evolved. During this period, many businesses, including shopping services, related to Internet commerce have failed. Because Internet commerce is a young industry, we may need to frequently change websites and other aspects of our business operations. Some of the special risks we face in our rapidly evolving industry are:

Our ShopFast software is designed to, as business develops, offer quick execution and creation of an online store with a potential of millions of products aggregated from different suppliers and fulfillment sources to the network. However, we may be unable to keep up with the technological developments of our competitors. If we are unable to overcome these risks and difficulties as we encounter them, our business, financial condition and results of operations may be adversely affected.

Our growth may be dependent on our ability to complete acquisitions and integrate operations of acquired businesses.

The evaluation of, and the acquisitions of other businesses with an established history of profitability or which our management believes will be profitable within two quarters of its acquisition. We may not be able to make acquisitions in the future and any acquisitions we do make may not be successful. Furthermore, future acquisitions may have a material adverse effect upon our operating results, particularly in periods immediately following the consummation of those transactions while the operations of the acquired businesses are in the process of being integrated with and into our then current operations. While the Company intends to exert substantial efforts to acquire complementary businesses, in the event the Company is not successful in acquiring complementary businesses, the Company may determine that it is in the best interests of the Company to commence to develop complementary products to its software products and/or incorporate additional functionality into newer versions of its current software, while still pursuing possible acquisitions.

As part of our business strategy, we intend to acquire complementary businesses. Our management believes that we can achieve profitability if, in addition to generating revenues based on sales of our software products, we also acquire complementary businesses. The Company expects, based on prior experience that the Company may have a negative cash flow for the first six to nine months after it commences operations, but there can be no assurance that prior experience will be correct and that such period may not be longer or shorter. There can be no assurance that any such acquired businesses will be profitable, If such acquired businesses were not profitable at the time of acquisition, the Company would expect such businesses to experience a negative cash flow for from six to nine months from acquisition, which could materially affect the operations of the Company and cause it to continue to incur financial losses for an indefinite period of time. The Company has had discussions with entities regarding the potential acquisition of businesses or assets, but has not entered into any binding agreements to consummate such potential transactions, but has entered into non-disclosure agreements to allow the Company to conduct basic reviews of the business operations and/or assets of such entities, each predicated on Company’s agreement not to identify such entities prior to the time a decision has been made by the Company to proceed beyond its initial discussions.

The Company believes that businesses in the areas of (i) e-commerce product sales that market products other than those then offered (or successfully offered) by the Company in its OLB database and (ii) in the area of e-commerce, but which successfully have in place software continuation programs and (iii) other e-commerce business meeting the profitability criteria, would be businesses that would be complementary to the Company’s present business. The term “continuation programs” refers to a software program for which the customer (and possibly each end user) pays a continuing monthly subscription fee.

We may not be able to successfully integrate the acquired company’s operations or personnel, or realize the anticipated benefits of the acquisition. Our ability to integrate acquisitions may be adversely affected by many factors, including the relatively large size of a business and the allocation of our limited management resources among various integration efforts.

In connection with the acquisitions of businesses in the future, we may decide to consolidate the operations of any acquired business with our existing operations or make other changes with respect to the acquired business, which could result in special charges or other expenses. Our results of operations also may be adversely affected in the future by expenses we incur in making acquisitions, by amortization of acquisition-related intangible assets with definite lives and by additional depreciation expense attributable to acquired assets. Any of the businesses we acquire may also have liabilities or adverse operating issues, including some that we fail to discover before the acquisition, as indemnity for such liabilities typically are limited. Additionally, our ability to make any future acquisitions may depend upon obtaining additional financing. We may not be able to obtain additional financing on acceptable terms or at all. To the extent that we seek to acquire other businesses in exchange for our common stock, fluctuations in our stock price could have a material adverse effect on our ability to complete acquisitions.

Risks Relating to Our Securities

We are controlled by our principal shareholder who has the power to direct all corporate decisions.

Ronny Yakov, our sole director and sole officer (Chief Executive Officer, President, Secretary and Interim Chief Financial Officer), beneficially owns approximately 61% of our outstanding common stock. Accordingly, he is in a position to control all actions taken at a meeting of the Board of Directors and/or at a meeting of shareholders. By virtue of such potential vote he can determine the future actions taken by the Company and also has the ability to delay or prevent a change of control, even if such a change of control would benefit our other shareholders.

There is a limited trading market for our securities.

Although our common stock is quoted in the OTC Bulletin Board, there has been a limited trading market for our securities. There can be no assurance that an active trading market in our securities will develop.

The market price of our securities may be highly volatile or may decline regardless of our operating performance.

The market prices of the securities of Internet companies have been volatile, and have been known to decline rapidly. Broad market and industry conditions and trends may cause fluctuations in the market price of our securities, regardless of our actual operating performance. Additional factors that could cause fluctuation in the price of our shares include, among other things:

In the past, securities class action litigation have often been brought against companies following periods of volatility in the market prices of their securities. Such litigation could result in significant costs and divert management attention and resources, which could seriously harm our business and operating results.

We may not be able to attract the attention of major brokerage firms, which could have a material adverse impact on the market value of our common stock.

Security analysts of major brokerage firms may not provide coverage of our common stock since there is no incentive to brokerage firms to recommend the purchase of our common stock. The absence of such coverage limits the likelihood that an active market will develop for our common stock. It also will likely make it more difficult to attract new investors at times when we require additional capital.

We have never paid cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.

We have never paid cash dividends on our common stock and we currently intend to retain any future earnings to fund the development and growth of our business. Accordingly, investors must rely on sales of their shares after price appreciation, which may never occur, as the only way to realize any future gains on their investment. Investors seeking cash dividends should not purchase our securities.

Our common stock is considered a ‘‘penny stock’’ and may be difficult to sell.

The Securities and Exchange Commission has adopted regulations which generally define a ‘‘penny stock’’ to be an equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to specific exemptions. This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect the ability of investors to sell their shares.

Our future sales of common stock by management and other stockholders may have an adverse effect on the then prevailing market price of our common stock.

In the event a public market for our common stock is sustained in the future, sales of our common stock may be made by holders of our public float (believed to be 2,779,817 shares) or by holders of restricted securities in compliance with the provisions of Rule 144 of the Securities Act of 1933. In general, under Rule 144, a non-affiliated person who has satisfied a six-month holding period in a fully reporting company under the Securities Exchange Act of 1934, as amended, may, sell their restricted Common Stock without volume limitation, so long as the issuer is current with all reports under the Exchange Act in order for there to be adequate common public information. Affiliated persons may also sell their common shares held for at least six months, but affiliated persons will be required to meet certain other requirements, including manner of sale, notice requirements and volume limitations. Non-affiliated persons who hold their common shares for at least one year will be able to sell their common stock without the need for there to be current public information in the hands of the public. Future sales of shares of our public float or by restricted common stock made in compliance with Rule 144 may have an adverse effect on the then prevailing market price, if any, of our common stock.

 Concentration of ownership and exercise of control

Ownership interest in our common stock is concentrated in a small group and may conflict with our other future stockholders who may be unable to influence management and exercise control over our business.

As of the date hereof, our executive officers and directors own 68% of the issued and outstanding shares of our common stock. Our current stockholders will continue to exert significant influence over our management and policies to:

Accordingly, our other stockholders may be unable to influence management and exercise control over our business.

Future designation and issuance of preferred stock

The Board of Directors of the Company can authorize the issuance of shares of the Company’s preferred stock, from time to time, in the future. In connection therewith, the Board of Directors can designate terms of the preferred stock for each such issuance that could have a materially adverse affect on the dividend rights and/or voting rights of the Common Shareholders.

Potential for significant dilution from future capital financings

In the event that the Company should determine to raise additional funds through the conduction of a capital financing, the shares issued in connection with such capital financing could result in a substantial dilution to the then current Common Shareholders.

There is very limited trading market for our securities

A very limited trading market exists for our securities and no significant market will develop until our shares are dispersed more widely. Any purchasers of shares from us directly and transferees of the shares held by our current stockholders may find it difficult to dispose of their shares.

Item 1B. Unresolved Staff Comments

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 2.  Property

We currently share office space at 1120 Avenue of the Americas, New York, NY and anticipate that the office will be sufficient for the foreseeable future. We pay monthly rent, which varies based upon the time we physically utilize the office space and the cost of the office services consumed. During the past 12 months we have paid a high of $400 per month and a low of $140 per month. We have the right to expand or minimize our use of the lease space in accordance with our needs.

The Company believes the facilities occupied are adequate for the purposes for which they are currently used and are well maintained.

Item 3.  Legal Proceedings

We are not currently a party to any legal proceedings and are not aware of any pending or threatened proceedings against us.

Item 4.  Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders during the fourth quarter of fiscal 2011.

PART II.

Our common stock is currently quoted over-the-counter on the Bulletin Board under the symbol "OLBG:OB." Prior to February 28, 2008 our common stock was traded in the pink sheets.

Our common stock is very thinly traded and the prices quoted above should not be used as a determinant of the actual worth of our common stock per share price at any given time.

In the event a public market for our common stock is sustained in the future, sales of our common stock may be made by holders of our public float (believed to be 2,779,817 shares) or by holders of restricted securities in compliance with the provisions of Rule 144 of the Securities Act of 1933. In general, under Rule 144, a non-affiliated person who has satisfied a six-month holding period in a fully reporting company under the Securities Exchange Act of 1934, as amended, may, sell their restricted Common Stock without volume limitation, so long as the issuer is current with all reports under the Exchange Act in order for there to be adequate common public information. Affiliated persons may also sell their common shares held for at least six months, but affiliated persons will be required to meet certain other requirements, including manner of sale, notice requirements and volume limitations. Non-affiliated persons who hold their common shares for at least one year will be able to sell their common stock without the need for there to be current public information in the hands of the public. Future sales of shares of our public float or by restricted common stock made in compliance with Rule 144 may have an adverse effect on the then prevailing market price, if any, of our common stock.

The Company has no outstanding preferred stock or options.

At December 31, 2011 there were approximately 130 holders of record of our common stock, although we believe that there are other persons who are beneficial owners of our common stock held in street name. The transfer agent and registrar for our common stock is Transfer Online, Inc., 317 SW Alder Street, 2nd Floor Portland, OR 97204. Their telephone number is (503) 227-2950.

Dividend Policy

We have never paid any cash dividends and intend, for the foreseeable future, to retain any future earnings for the development of our business. Our Board of Directors will determine our future dividend policy on the basis of various factors, including our results of operations, financial condition, capital requirements and investment opportunities.

Recent Issuance of Unregistered Securities

During the year ended December 31, 2011, we made the sales or issuances of unregistered securities listed in the table below.

Recent Purchases of Securities

In 2011 and 2010 there were no repurchases of our common stock.

Item 6.  Selected Financial data

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operation

Results of Operations

For the Year Ended December 31, 2011 compared to the Year Ended December 31, 2010

REVENUE

Revenue from operations for the year ended December 31, 2011 decreased $33,580 or 15% to $184,758 from $218,338 for the year ended December 31, 2010. The decrease is mainly attributed to a decline in the company's fees for the sale of health-related discount benefit plans as earned as part of the ShopFast program.

GROSS PROFIT

Gross profit from operations for the year ended December 31, 2011 decreased $934 to $120,824 from $121,758 for the year ended December 31, 2010. There was little change as monthly service fees the company pays for the administration for the sales and maintenance of the health-related discount benefit plans as earned as part of the ShopFast program changed little with the decreased sales.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative ("G&A") expenses decreased by $44,616 or 21% to $166,182 from $210,798 for the year ended December 31, 2010. A significant part of the decrease in G&A expense is the result of a decrease in marketing, web and consulting expenses.

PROVISION FOR INCOME TAXES

Up to this date, the Company has not had taxable income as it has incurred losses for tax purposes. The tax asset generated by the tax losses and any temporary differences has been fully reserved.

NET LOSS

The net loss increased by $298,330 from a loss of $381,161 for the year ended December 31, 2010, to a loss of $679,491 for the year ended December 31, 2011.  In 2010 the company recorded a onetime gain on settlement of a lawsuit of $86,887. The lack of this gain and the addition of $20,025 of interest expense and a $66,087 loss on derivative liability in the current year resulted in approximately $173,000 of the increase to the loss from year to year. In addition; although there was no impairment expense in the current year there was $273,021 of amortization expense.

Financial Condition, Liquidity and Capital Resources

During the year ended December 31, 2011, the Company used $60,063 of cash for operating activities, as compared to $131,647 cash used through the fiscal year ended December 31, 2010. The decrease in the use of cash for operating activities was in conjunction with the decrease in general expenses.

Cash provided from financing activities during the year ended December 31, 2011 was $57,000 as compared to $135,000 through fiscal year ended December 31, 2010. In 2011 the Company executed two convertible notes payable, both of which were converted on December 29, 2011. In 2010 the Company received all of its financing from the sale of common stock.

Our financial statements as of December 31, 2011 have been prepared under the assumption that we will continue as a going concern through December 31, 2012. Our independent registered public accounting firm has issued their report dated March 13, 2012 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.

We anticipate that our future liquidity requirements will require a need to obtain additional financing. The Company’s primary source 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

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 and to commence marketing of our software.  We believe that our current cash and investment balances will not 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 2012, 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.

We launched limited quality control test marketing of the software component of our ShopFast PC product during fiscal 2008. In the second quarter of fiscal 2012 we plan to commence full marketing of the ShopFast PC product and we plan 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 complete the limited quality control evaluation marketing of 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 final stages of our quality assurance  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.

Future Commitments

The Company has signed a five year employment agreement with Ronny Yakov, its President and Interim Chief Financial Officer.  The agreement pays Mr. Yakov $275,000 per year salary plus $1,500 per month car allowance.  The agreement expires February 28, 2013.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditures.

Critical Accounting Policies

The following is a discussion of the accounting policies the Company believes are critical to its operations:

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 requires 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 had limited revenues during fiscal 2010 and 2011 while conducting its limited quality control evaluation of its ShopFast PC software.  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 the Revenue Recognition topic of the FASB ASC 605, 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 the Revenue Recognition topic of the FASB ASC 605, accounting for shipping and handling fees and costs.

The Company also recognizes revenues from membership fees for the sales of health-related discount benefit plans as earned as part of the ShopFast program. These arrangements are generally renewable monthly and revenue is recognized over the renewal period. 

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.

Research and Development Costs

In the past, the Company has incurred significant software development costs in connection with its products. In accordance with the Software topic of the FASB ASC 985, costs should be capitalized once technical feasibility is achieved. In the case of the Company this would be when the product is commercially viable (“commercial feasibility”). The Company’s management has taken the position that commercial feasibility is reached very late in the development process and therefore had not capitalized any development costs in regard to their products.

Income Taxes

In accordance with the Income Tax topic of the FASB ASC 740, detailed guidance is provided for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Tax positions must meet a “more-likely-than-not” recognition threshold. During the year ended December 31, 2011, we recognized no adjustments for uncertain tax benefits.

We recognize interest and penalties, if any, related to uncertain tax positions in selling, general and administrative expenses. No interest and penalties related to uncertain tax positions were accrued at December 31, 2011.

Income taxes are computed using the asset and liability method of accounting. Under the asset and liability method, a deferred tax asset or liability is recognized for estimated future tax effects attributable to temporary differences and carry forwards. The measurement of deferred income tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax benefits only to the extent, based on available evidence; it is more likely than not such benefits will be realized. Our deferred tax assets were fully reserved at December 31, 2011 and December 31, 2010.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 8. Financial Statements and Supplementary Data

The OLB Group, Inc.

FINANCIAL STATEMENTS

December 31, 2011 and 2010

The OLB Group, Inc. 

TABLE OF CONTENTS

Report of Independent Registered Public Accounting Firm

To the Board of Directors

The OLB Group, Inc.

New York, New York

We have audited the accompanying balance sheets of The OLB Group, Inc. as of December 31, 2011 and 2010 and the related statements of operations, stockholders' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The OLB Group, Inc. as of December 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 10 to the financial statements, the Company has suffered recurring losses from operations and has a working capital deficit. This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 10. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

HJ & Associates, LLC

Salt Lake City, Utah
March 13, 2012

The OLB Group, Inc.

Balance Sheets

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

The OLB Group, Inc. 

Statements of Operations

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

The OLB Group, Inc. 

Statements of Stockholders’ Equity (Deficit)

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

The OLB Group, Inc.

Statements of Cash Flows

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

The OLB Group, Inc.

Notes to the Financial Statements

December 31, 2011 and 2010

NOTE 1 - BACKGROUND

The company incorporated in the State of Delaware on November 18, 2004 for the purpose of merging with OLB.com (On-line Business), Inc., a New York corporation incorporated in 1993 (“OLB.com”). The merger was done for the purpose of changing our state of incorporation from New York to Delaware.

As result of the merger, The Company acquired all of the assets of OLB.com, including its intellectual property assets. In connection with the merger, each of the former common and preferred stockholders of OLB.com received five shares of our common stock in exchange for each outstanding share of OLB.com

The company is authorized to issue 200,000,000 shares of common stock, par value $0.0001 per share, and 50,000,000 shares of preferred stock, par value $0.01 per share. We currently have 7,155,548 shares of common stock issued and outstanding. No shares of preferred stock are currently outstanding. Our fiscal year end date is December 31.

NOTE 2 - RECENT ACCOUNTING PRONOUNCEMENTS

In September 2011 Accounting Standards Update No. 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for impairment. This ASU's objective is to simplify the process of performing impairment testing for Goodwill. With this update a company is allowed to asses qualitative factors, first, to determine if it is more likely than not (greater than 50%) that the FV is less than the carrying amount. This would be done, prior to performing the two-step goodwill impairment testing, as prescribed by Topic 350. Prior to this ASU, all entities were required to test, annually, their good will for impairment by Step 1 - comparing the FV to the carrying amount, and if impaired, then step 2 - calculate and recognize the impairment. Therefore, the fair value measurement is not required, until the "more likely than not" reasonableness test is concluded. Effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.

In May 2011, FASB issued Accounting Standards Update No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This ASU clarifies the board's intent of current guidance, modifies and changes certain guidance and principles, and adds additional disclosure requirements concerning the 3 levels of fair value measurements. Specific amendments are applied to FASB ASC 820-10-35, Subsequent Measurement and FASB ASC 820-10-50, Disclosures. This ASU is effective for interim and annual periods beginning after December 15, 2011.

In June 2011, FASB issued Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. - ASU 2011-05. Current US GAAP allows companies to present the components of comprehensive income as a part of the statement of changes in stockholders' equity. This ASU eliminates that option. in this Update, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income This ASU is effective interim and annual periods beginning after December 15, 2011. This ASU should be applied retrospectively.

In December 2010, the FASB Accounting Standards Update 2010-29 Business Combinations Topic 805, which requires a public entity to disclose pro forma information for business combinations that occurred in the current reporting period. The disclosures include pro forma revenue and earnings of the combined entity for the current reporting period as though the acquisition date for all business combinations that occurred during the year had been as of the beginning of the annual reporting period. If comparative financial statements are presented, the pro forma revenue and earnings of the combined entity for the comparable prior reporting period should be reported as though the acquisition date for all business combinations that occurred during the current year had been as of the beginning of the comparable prior annual reporting period. Effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010.

The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Income Taxes

Income taxes are computed using the asset and liability method of accounting. Under the asset and liability method, a deferred tax asset or liability is recognized for estimated future tax effects attributable to temporary differences and carryforwards. The measurement of deferred income tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax benefits only to the extent, based on available evidence; it is more likely than not such benefits will be realized. The Company’s deferred tax assets were fully reserved at December 31, 2011 and December 31, 2010.

The Company accounts for its income taxes using the Income Tax topic of the FASB ASC 740, which requires the recognition of deferred tax liabilities and assets for expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Concentration of credit risk

Financial instruments which potentially subject the Company to concentration of credit risk consist of 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.

Property and Equipment

Property and equipment are stated at cost.  Depreciation and amortization are provided utilizing the straight-line method over the related asset’s estimated useful life.  Assets under capital leases and leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvement.

The Company adopted FASB ASC 350-40, Internal Use Software, which requires the capitalization of internal use software and other related costs under certain circumstances.  The Company is implementing a direct shopping database.  External direct costs of materials and services and payroll costs of employees working solely on the application development stage of the project will be capitalized as required. To date we have not capitalized any software development costs.

Maintenance and repairs are charged to expense as incurred; renewals and improvements that extend the useful life of the assets are capitalized.  Upon retirement or disposal, the asset cost and the related accumulated depreciation and amortization are eliminated from the respective accounts and a resulting gain or loss, if any, is included in the results of operations.

These assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable.  Furthermore, the assets are evaluated for continuing value and proper useful lives by comparison to expected future cash projections.

Revenue and cost recognition

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 the Revenue Recognition topic of the FASB ASC 605, 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.

The Company recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collection is reasonably assured.

As a rule, a majority of revenue for The Company is recognized when actual collection of cash occurs. This is true for License revenue paid in full, Advanced Solutions revenue and Subscription revenue. Our License revenue on payment plans allows for customers to pay over time in installments and is recognized upon delivery of the product at the present value of the installment payment stream.

Costs are recorded at the time the related revenue is recorded. Payment processing costs are recorded in the period the costs are incurred and customer acquisition costs are comprised primarily of telemarketing costs and service costs and other additional benefit services.

Membership Fees

The Company recognizes revenues from membership fees for the sales of health-related discount benefit plans as earned as part of the ShopFast program. These arrangements are generally renewable monthly and revenue is recognized over the renewal period.  As these products often include elements sold through contracts with third-party providers, the Company considers each contractual arrangement in accordance with the Revenue Recognition topic of the FASB ASC 605. The Company’s current contracts meet these requirements for reporting revenue on a gross basis. The Company records a reduction in revenue for refunds, chargeback’s from credit card companies, and allowances based upon actual history and management’s evaluation of current facts and circumstances.

Commissions

The Company will pay commissions for its sales of third-party products. Commissions are recognized as products are sold and services performed and the Company has accomplished all activities necessary to complete the earnings process.

Marketing Fees and Materials

The Company markets certain of its products through a telemarketing sales organization whereby independent distributors establish their own network of associates. The independent distributors pay the Company a fee to become marketing representatives on behalf of the Company. In exchange, the representatives receive access, on an annual basis, to various marketing and promotional materials and tools as well as access to customized management reports; accordingly revenue from marketing fees is recognized over an annual period.  The Company also earns ancillary revenue from the sale of marketing materials which is recognized when the materials are provided to the representatives.

Intangible assets

Intangible assets are carried at cost and amortized over their estimated useful lives, generally on a straight-line basis over two years. The Company reviews identifiable amortizable intangible assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Determination of recoverability is based on the lowest level of identifiable estimated undiscounted cash flows resulting from use of the asset and its eventual disposition. Measurement of any impairment loss is based on the excess of the carrying value of the asset over its fair value. The Company has elected to perform its annual analysis at the end of its reporting year. As of December 31, 2010, the Company deemed that certain intangible assets acquired through its asset purchase agreement with Retailer Networks, Inc. were fully impaired. There was no such impairment for the year ended December 31, 2011. See Note 4 –Intangible Assets.

Stock-based Compensation

We account for equity instruments issued in exchange for the receipt of goods or services from non-employees. Costs are measured at the fair market value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of the date on which there first exists a firm commitment for performance by the provider of goods or services or on the date performance is complete. The Company recognizes the fair value of the equity instruments issued that result in an asset or expense being recorded by the company, in the same period(s) and in the same manner, as if the Company has paid cash for the goods or services.

Net Loss per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding.

Fair value of financial instruments

For certain of the Company’s non-derivative financial instruments, including cash and cash equivalents, receivables, accounts payable, and other accrued liabilities, the carrying amount approximates fair value due to the short-term maturities of these instruments. The estimated fair value of long-term debt is based primarily on borrowing rates currently available to the Company for similar debt issues. The fair value approximates the carrying value of long-term debt.

ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures.  The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

The following presents the gross value of assets and liabilities that were measured and recognized at fair value, as of December 31, 2011 and 2010.

NOTE 4 -     INTANGIBLE ASSETS

On June 17, 2010 the Company completed an asset purchase agreement with Retailer Networks, Inc. (RNI). Pursuant to the terms of that agreement the Company purchased a number of intangible assets from RNI, including, but not limited to, customer information, trademarks, domain names, and educational resources for e-commerce. The purchase price that was paid to RNI for the assets consisted of 577,842 shares of OLB common stock and 665,842 warrants exercisable for the purchase of common stock, at the purchase price of $0.40. The fair value of the common stock was determined using the quoted market price on the date of issuance of $0.028 and the fair value of the purchase warrants were determined using the Black-Scholes option pricing model, for a total purchase price of $650,051. The warrants are valid to exercise for 24 months from the closing date. In addition, RNI agreed to purchase OLB common stock totaling $100,000 at a purchase price of $0.028.

The Company has elected to perform its annual analysis at the end of its reporting year. As of December 31, 2010 it was determined that certain intangibles would not be used by the company; therefore, these items are considered fully impaired and an impairment expense of $104,008 has been recognized as of December 31, 2010.

The following table summarizes the Company’s carrying amount of intangible assets as of December 31,

The amortizable intangible assets have useful lives not exceeding two years and a weighted average useful life of two years. Amortization expense for the years ended December 31, 2011 and 2010, respectively, were $273,021 and $0.

NOTE 5 - STOCKHOLDERS’ EQUITY (DEFICIT)

In 1999 the Company adopted the 1999 Stock Option Plan (the "Plan").  Pursuant to the Plan, designated employees, including officers and directors of the Company and certain outside consultants, will be entitled to receive qualified and nonqualified stock options to purchase up to 500,000 shares of common stock.

Under the terms of the Plan, the minimum exercise price of options granted cannot be less than 100% of the fair market value of the common stock of the Company on the option grant date.  Options granted under the Plan generally expire ten years after the option grant date.  For incentive stock options granted to such persons who would be deemed to have in excess of a 10% ownership interest in the Company, the option price shall not be less than 110% of such fair market value for all options granted, and the options expire five years after the option grant date.

The company has 50,000,000 preferred shares authorized at the par value of $0.01. There were no preferred shares outstanding at December 31, 2011 and 2010.

There were no options outstanding at December 31, 2011 or December 31, 2010.

On October 12, 2011, the Company filed a Certificate of Amendment with the Delaware Secretary of State in order to effectuate a one for twenty (1:20) reverse stock split (the “reverse split”) and a change of the par value from $0.01 to $0.0001. The board of directors determined that it would be in the Company's best interest to affect the reverse split and approved this corporate action by unanimous written consent. All shares throughout these financial statements have been retroactively restated to reflect the split.

On December 29, 2011, the Company issued 402,385 shares of common stock in conversion of $57,000 of principle and $3,358 of accrued interest on a note payable. Shares were issued at $0.15, which represented a 25% discount to the closing price of $0.20 on the day of conversion as set forth in the conversion terms included in the note agreement.

On December 29, 2011, the Company issued 333,333 shares of common stock for $50,000 cash. Shares were issued at $0.15 per share. As the $50,000 was not received until January 10, 2012 the Company recorded a stock receivable for the $50,000 as of December 31, 2011.

In June 2010 the Company issued 577,842 shares of common stock in exchange for certain intangible assets as part of an Asset Purchase Agreement.

In June and July of 2010 the Company sold 196,428 shares of common stock for $0.56 for total proceeds of $110,000. The stock was purchased as part of the agreement with the above mentioned Asset Purchase Agreement.

On December 31, 2010, the Company sold 25,000 shares of common stock for $1.00 for proceeds of $25,000.

On December 31, 2010, the Company issued 2,023,400 shares of common stock in conversion of $202,340 of accrued salary. Shares were valued at $0.10, which approximated the market value of the shares on the day of exchange.

NOTE 6 - RELATED PARTY TRANSACTIONS

On December 31, 2010, the Company issued 2,023,400 shares of common stock in conversion of $202,340 of accrued salary. Shares were valued at $0.10, which approximated the market value of the shares on the day of exchange.

During the year ended December 31, 2011, the Company entered into a $7,000 note payable and a $50,000 convertible note payable with a stockholder. See note 7 for discussion of the terms of these notes.

NOTE 7 - CONVERTIBLE NOTE AND DERIVATIVE LIABILITY

On February 25, 2011 a stockholder loaned the company $7,000. The loan had an interest rate of 10% and was due on demand.

On June 10, 2011, the Company issued a $50,000 convertible note to the same stockholder that had previously loaned the Company $7,000. The note was issued with interest at 10% per annum, due within one year and converts at a discount of 25% of the closing bid for the Company’s common stock on the date of conversion. As required by ASC 470-20 the Company recorded a debt discount in the amount of $16,667 based on the discount to market available at the time of conversion. The discount was to be amortized over the life of the loan to interest expense. In addition, an initial derivative liability value of $64,828 was calculated using the Black Scholes pricing model using one year to maturity and assuming a risk free rate of 0.19% and a volatility of 429%. 

On December 29, 2011, the note holder converted the entire principle of $57,000 and $3,358 of interest into 402,385 shares of common stock. The shares were issued at $0.15, which represented a 25% discount to the closing price of $0.20. The remaining debt discount was expensed to interest expense. Total interest expense resulting from amortization of the debt discount was $16,667 for the year ended December 31, 2011. In addition, a derivative liability value of $66,087 immediately prior to conversion was calculated using the Black Scholes pricing model using half a year to maturity and assuming a risk free rate of 0.07% and a volatility of 728%. The total derivative liability of $66,087 was charged to additional paid in capital upon conversion.

NOTE 8 – STOCK WARRANTS

A summary of the status of the Company’s outstanding stock warrants as of December 31, 2011 and December 31, 2010 and changes during the periods is presented below:

NOTE 9 – INCOME TAXES

Deferred taxes are provided on a 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 changes in tax laws and rates on the date of enactment.

Net deferred tax assets consist of the following components as of December 31:

The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the years ended December 31, 2011 and 2010 due to the following:

At December 31, 2011, the Company had net operating loss carry forwards of approximately $2,375,700 that maybe offset against future taxable income from the year 2012 through 2031.  No tax benefit has been reported in the December 31, 2011 or December 31, 2010 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations.  Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.

ASC Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.

The Company includes interest and penalties arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income taxes. As of December 31, 2011, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company files income tax returns in the U.S. federal jurisdiction and in the state of New York. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 200.

NOTE 10 – 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 $288,385, which together raises substantial doubt about its ability to continue as a going concern.  Management is presently pursuing equity 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.

The Company anticipates that it will continue to incur losses for some time. The Company’s continued existence is dependent on its ability to generate additional revenues and on obtaining additional financing from its stockholders and external sources.  Accordingly, there can be no assurance that the Company will succeed in executing its plans and have all the financing necessary for its operations.  These matters raise substantial doubt about the Company’s ability to continue as a going concern.  The accompanying financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

NOTE 11 – SUBSEQUENT EVENTS

The company has evaluated subsequent events in accordance with the provisions of ASC 855 noting no reportable subsequent events other than that listed below.

On January 10, 2012 the Company received the $50,000 for the stock receivable it had recorded as of December 31, 2011.

There are not and have not been any disagreements between us and our accountants on any matter of accounting principles, practices or financial statement disclosure.

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. This evaluation was carried out under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Interim Chief Financial Officer.

Based upon that evaluation, the Chief Executive Officer and the Interim Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at December 31, 2011 to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. The Company’s disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Interim Financial officer as appropriate to allow timely decisions regarding required disclosure.

Internal Control over Financial Reporting

Management’s Report on Internal Control over Financial Reporting

Internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) is a process designed by, or under the supervision of, our principal executive and principal financial officers, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The management is responsible for establishing and maintaining adequate internal control over our financial reporting. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting using the Internal Control – Integrated Framework developed by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our Chief Executive Officer and Interim Financial Officer have concluded that our internal control over financial reporting was not effective as of December 31, 2011.

We are aware of the following material weaknesses in internal control that could adversely affect the Company’s ability to record, process, summarize and report financial data:

Due to the size of the Company we lack the personnel to maintain an adequate level of separation of duties, and have also failed in the timely recording of certain transactions.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company's internal control over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.

None.

Part III

Directors and Executive Officers

Directors and Executive Officers

The following table sets forth the names, ages, and titles of our executive officers and directors.

Ronny Yakov founded OLB.com, our predecessor in 1993, and has served as our Chief Executive Officer, President and as a director from inception until the present. In November, 2007 he took on the additional office of Interim Chief Financial Officer. In February, 2008 he took on the additional office of Secretary. He has been the sole director since 2003. During the period that the Company was subject to the Merger Agreement with MetaSource Group, Inc. (2002-2004), Mr. Yakov served as an officer and director of only the Company and was never an officer or a director of MSGR. OLB.com grew in sales from approximately $200,000 in 1993 to approximately $3.2 million in 1997. Mr. Yakov has over 20 years of experience in the graphic arts industry. Prior to founding OLB.com, Mr. Yakov owned design and production studios in Israel.

All directors hold office until the next annual meeting of stockholders of the Company and until their successors are elected and qualified. Officers hold office until the first meeting of directors following the annual meeting of stockholders and until their successors are elected and qualified, subject to earlier removal by the Board of Directors.

No officer or director has, during the past five years, been involved in (a) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time, (b) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses), (c) any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities or (d) a finding by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

Due to the early stage nature of our business, we do not have an audit committee, nor have our board of directors deemed it necessary to have an audit committee financial expert. Insofar that we are not a listed security, we are not required to have an audit committee.  Within the next 12 months, however, we expect to have several committees in place, including a compensation, budget and audit committee.  At such time, we intend to have a member of the Board of Directors that meets the qualifications for an audit committee financial expert.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors and persons who own more than 10% of our common stock to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports that they file.

Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended December 31, 2011, all filing requirements applicable to our officers, directors and greater than 10% percent beneficial owners were complied with.

Code of Ethics

The Board of Directors has adopted a Code of Ethics applicable to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, which is designed to promote honest and ethical conduct; full, fair, accurate, timely and understandable disclosure; and compliance with applicable laws, rules and regulations.   A copy of the Code of Ethics will be provided to any person without charge upon written request to the Company at its executive offices, 1120 Avenue of the Americas, 4th floor, New York, NY 10036.

The following summary compensation table sets forth the aggregate compensation we paid or accrued to our Chief Executive Officer during the fiscal years ended December 31, 2008 through 2011.  No other officer received compensation in excess of $100,000.

(1) Accrued but not paid and converted to stock on a quarterly or annual basis.

(2) Car allowance

Employment Agreements

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, 2013. The agreement provides for an annual salary of $275,000 fringe benefits ($1,500 monthly automobile allowance, any benefit plans of the company and 2 weeks paid vacation) and an incentive bonus of $100,000 based on the achievement of certain performance criteria. The extended employment agreement does not provide for stock options. The extended employment agreement also includes a covenant not to compete with the Company for a period of one (1) year after employment ceases.

Outstanding Equity Awards at Fiscal Year-End

There are no stock options issued and outstanding to our employees, officers or directors.

In 1999 the Company's predecessor adopted the 1999 Stock Option Plan (the "Plan"). Pursuant to the Plan, designated employees, including officers and directors of the Company and certain outside consultants, will be entitled to receive qualified and nonqualified stock options to purchase up to 500,000 shares of common stock.

Under the terms of the Plan, the minimum exercise price of options granted cannot be less than 100% of the fair market value of the common stock of the Company on the option grant date. Options granted under the Plan generally expire ten years after the option grant date. For incentive stock options granted to such persons who would be deemed to have in excess of a 10% ownership interest in the Company, the option price shall not be less than 110% of such fair market value for all options granted, and the options expire five years after the option grant date.

Neither the Company nor its predecessor have issued any options under the Plan at any time to date.

Director Compensation

Our directors do not receive fixed compensation for their services as directors.  Directors are reimbursed for their reasonable out-of-pocket expenses incurred in connection with their duties.

Indemnification of Directors and Officers

Section 145 (“Section 145”) of the Delaware General Corporation Law, as amended (the “DGCL”), permits indemnification of directors, officers, agents and controlling persons of a corporation under certain conditions and subject to certain limitations. Section 145 empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director, officer or agent of the corporation or another enterprise if serving at the request of the corporation. Depending on the character of the proceeding, a corporation may indemnify against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding if the person indemnified acted in good faith and in a manner he or she reasonably believed to be in or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. In the case of an action by or in the right of the corporation, no indemnification may be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine that despite the adjudication of liability such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. Section 145 further provides that to the extent a present or former director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to above or in the defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.

In accordance with Section 145, the Registrant’s Bylaws provide that the Registrant shall indemnify its officers and directors, and any employee who serves as an officer or director of any corporation at the Registrant’s request. According to Article X of the Bylaws, directors and officers as well as employees and individuals may be indemnified against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement in connection with specified actions, suits or proceedings, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation as a derivative action) if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful.

The following table sets forth, as of December 31, 2011, information regarding the beneficial ownership of each class of our voting securities by: (i) our officers and directors; (ii) all of our officers and directors as a group; and (iii) each person known by us to beneficially own 5% or more of any class of our outstanding voting securities. Generally, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to dispose or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which the person has the right to acquire beneficial ownership within 60 days. At December 31, 2011, 7,155,548 shares of our common stock were outstanding.

On December 31, 2010, the Company issued 2,023,400 shares of common stock in conversion of $202,340 of accrued salaries. Shares were valued at $0.10.

The conversion price was arbitrarily determined by us and Mr. Yakov and does not bear any relationship to assets, earnings, book value or other objective criteria of value. In addition, no investment banker, appraiser or other independent third party was consulted concerning the conversion price for the shares or the fairness of the conversion price.

Director Independence

Our board of directors has determined that none of our directors are “independent” as that term is defined by the National Association of Securities Dealers Automated Quotations (“NASDAQ”).  See “Lack of Committees” for the NASDAQ definition of “Independent Director.”

Audit Fees

Audit fees billed to the Company by HJ & Associates, LLC for its audit of the Company’s financial statements included in this Form 10-K, and for its review of the financial statements included in the Company’s Quarterly Reports on Form 10-Q, filed with the Securities and Exchange Commission for 2011 and 2010 totaled $16,000 and $16,000, respectively.

Audit-Related

There were no audit- related fees billed to the Company by HJ & Associates, LLC for the years ended December 31, 2011 and 2011.

Tax Fees

Tax fees billed to the Company by HJ & Associates, LLC for its tax returns for the years ended December 31, 2011 and 2010 were $734 and $1,298, respectively.

Other

No other fees were billed to the Company by HJ & Associates, LLC for all other non-audit or tax services rendered to the Company for the years ended December 31, 2011 and 2010.

Audit Committee Pre-Approval Policies

As of this filing date, OLB has no Audit Committee.  Therefore it has not adopted a procedure under which all fees charged by HJ & Associates, LLC must be pre-approved by the Board of Directors, subject to certain permitted statutory de minimus exceptions.

Lack of Committees

Our company has no standing nominating and compensation committees of our board of directors or committees performing similar functions. We currently lack an audit committee of our board of directors. We are currently seeking to nominate and appoint to the board two independent directors and to form an audit committee consisting of the two independent directors. It is our goal that at least, one of the two independent directors would be deemed a “financial expert” within the meaning of Sarbanes-Oxley Act of 2002, as amended. An “independent director” is defined in Rule 4200(a)(14) of the NASDAQ’s listing standards to mean a person other than an officer or employee of the company or any other individual having a relationship which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The following persons should not be considered independent:

The term “Financial Expert” is defined as a person who has the following attributes: an understanding of generally accepted accounting principles and financial statements; has the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves; experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the company’s financial statements, or experience actively supervising one or more persons engaged in such activities; an understanding of internal controls and procedures for financial reporting; and an understanding of audit committee functions.

Under the National Association of Securities Dealers Automated Quotations definition, an “independent director means a person other than an officer or employee of the Company or its subsidiaries or any other individuals having a relationship that, in the opinion of the Company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of the director. The board’s discretion in determining director independence is not completely unfettered. Further, under the NASDAQ definition, an independent director is a person who (1) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years), employed by the company; (2) has not (or whose immediate family members have not) been paid more than $60,000 during the current or past three fiscal years;  (3) has not (or whose immediately family has not) been a partner in or controlling shareholder or executive officer of an organization which the company made, or from which the company received, payments in excess of the greater of $200,000 or 5% of that organizations consolidated gross revenues, in any of the most recent three fiscal years; (4) has not (or whose immediate family members have not), over the past three years been employed as an executive officer of a company in which an executive officer of Ace has served on that company’s compensation committee; or (5) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years) a partner of the Company’s outside auditor.

We can provide no assurances that our board’s efforts to select two persons to serve as independent directors and on the proposed audit committee will be successful. In the event an audit committee is established, its first responsibility would be to adopt a written charter. Such charter would be expected to include, among other things:

(1) Incorporated by reference to Registrant’s Registration Statement on Form 10-SB as filed with the Commission on December 21, 2007.

(2) Incorporated by reference to Registrant’s Registration Statement on Form 10-KSB as filed with the Commission on April 7, 2008.

* Filed herewith.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.