OLB GROUP, INC. - Quarter Report: 2013 September (Form 10-Q)

f10q0913_olbgroup.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _______to _______

Commission File Number: 000-52994

THE OLB GROUP, INC.

(Exact name of small business issuer as specified in its charter)

DELAWARE		13-4188568
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

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

(Address of principal executive offices)

(212) 278-0900

(Registrant's telephone number)

(Former name, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x

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

Yes ¨ No x

As of November 6, 2013 the Company had outstanding 10,586,644 shares of its common stock, par value $0.0001.

THE OLB GROUP, INC.

FORM 10-Q

For the Quarterly Period Ended September 30, 2013

INDEX

PART I	Financial Information	3
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18
Item 4.	Controls and Procedures	18

PART II	Other Information	19
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3.	Defaults Upon Senior Securities	19
Item 4.	Mine Safety Disclosures	20
Item 5.	Other Information	20
Item 6.	Exhibits	20
Signatures		21

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

The OLB Group, Inc.

FINANCIAL STATEMENTS

September 30, 2013 and December 31, 2012

The OLB Group, Inc.

TABLE OF CONTENTS

Balance Sheets as of September 30, 2013 (unaudited) and December 31, 2012	5

Statements of Operations for the Three and Nine Months Ended September 30, 2013 and 2012 (unaudited)	6

Statements of Cash Flows for the Nine Months Ended September 30, 2013 and 2012 (unaudited)	7

Notes to the Financial Statements (unaudited)	8

The OLB Group, Inc.

Balance Sheets

ASSETS	September 30, 2013			December 31, 2012
CURRENT ASSETS	(unaudited)

Cash	$	2,627		$	8,883

Total Current Assets		2,627			8,883

OTHER ASSETS

Intangible assets, net		-			-
Internet domain		4,965			4,965

TOTAL ASSETS	$	7,592		$	13,848

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	87,210		$	85,483
Note payable - related party		25,000			-
Accrued officer compensation		159,818			-

Total Current Liabilities		272,028			85,483

TOTAL LIABILITIES		272,028			85,483

STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares outstanding		-			-
Common stock, $0.0001 par value; 200,000,000 shares authorized, 10,586,644 and 10,178,312 shares issued and outstanding, respectively		1,059			1,018
Additional paid-in capital		13,716,231			13,641,273
Accumulated deficit		(13,981,726	)		(13,713,926	)

Total Stockholders’ Equity (Deficit)		(264,436	)		(71,635	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	7,592		$	13,848

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

The OLB Group, Inc.

Statements of Operations

(Unaudited)

	For the Nine Months Ended September 30,						For the Three Months Ended September 30,
	2013			2012			2013			2012

Net revenues	$	74,752		$	98,640		$	24,111		$	31,431

Cost of sales		26,144			38,325			5,437			12,310

Gross margin		48,608			60,315			18,674			19,121

OPERATING EXPENSES
Officer’s compensation		206,250			206,250			68,750			68,750
Amortization expense		-			204,953			-			68,817
General & administrative expenses		104,689			155,139			39,616			88,654
Total operating expenses		310,939			566,342			108,366			226,221

Loss from operations		(262,331	)		(506,027	)		(89,692	)		(207,100	)

OTHER INCOME (EXPENSE)
Gain on settlement of debt		-			5,609			-			-
Interest expense		(5,469	)		(10,136	)		(2,397	)		(9,424	)

Total other expense		(5,469	)		(4,527	)		(2,397	)		(9,424	)

NET LOSS	$	(267,800	)	$	(510,554	)	$	(92,089	)	$	(216,524	)

BASIC LOSS PER SHARE	$	(0.03	)	$	(0.07	)	$	(0.01	)	$	(0.03	)

BASIC WEIGHTED AVERAGE SHARES		10,434,935			7,155,548			10,579,307			7,155,548

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

The OLB Group, Inc.

Statements of Cash Flows

(Unaudited)

	For the Nine Months Ended September 30,
	2013			2012

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss	$	(267,800	)	$	(510,554	)
Adjustments to Reconcile Net Loss to Net Cash Provided by Operations:
Amortization of intangible assets		-			204,953
Interest expense from amortization of debt discount		-			4,794

Changes in assets and liabilities:
Increase in accounts payable and accrued expenses		161,544			174,370

Net Cash Used by Operating Activities		(106,256	)		(126,437	)

CASH FLOWS FROM INVESTING ACTIVITIES		-			-

CASH FLOWS FROM FINANCING ACTIVITIES
Increase in cash overdraft
Proceeds from the sale of common stock		75,000			50,000
Proceeds from related party notes payable		25,000			100,000

Net Cash Provided by Financing Activities		100,000			150,000

NET CHANGE IN CASH		(6,256	)		23,563

CASH – BEGINNING OF PERIOD		8,883			845

CASH – END OF PERIOD	$	2,627		$	24,408

CASH PAID FOR

Interest	$	-		$	-
Income taxes	$	-		$	-

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

The OLB Group, Inc.

Notes to the Financial Statements

September 30, 2013

(Unaudited)

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.

NOTE 2 - 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 September 30, 2013 and December 31, 2012.

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.

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

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented.

There were no potentially dilutive shares outstanding as of September 30, 2013 and 2012.

Recent Accounting Pronouncements

In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, ''Technical Corrections and Improvements" in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.

In August 2012, the FASB issued ASU 2012-03, "Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)" in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.

In July 2012, the FASB issued ASU 2012-02, "Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment" in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles -Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles-Goodwill and Other-General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity's financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 is not expected to have a material impact on our financial position or results of operations.

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 - 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 following table summarizes the Company’s carrying amount of intangible assets as of September 30, 2013 and December 31, 2012:

Amortizable Intangible Assets	September 30, 2012		December 31, 2012
Customer and Product Information	$	390,030	$	390,030
Trademarks, domain names, & other intangibles		91,007		91,007
Educational Resource		65,005		65,005
Total Intangible Assets		546,042		546,042
Less accumulated amortization		(546,042)		(546,042)
Net Intangible Assets	$	-	$	-

The amortizable intangible assets have useful lives not exceeding two years and a weighted average useful life of two years. Amortization expense for the nine months ended September 30, 2013 and for the year ended December 31, 2012 was $0 and $273,021, respectively.

NOTE 4 - STOCKHOLDERS’ EQUITY (DEFICIT)

The company has 50,000,000 preferred shares authorized at the par value of $0.01. There were no preferred shares outstanding at September 30, 2013 and December 31, 2012.

On December 27, 2012, the Company issued 166,666 shares of common stock for $25,000 cash. Shares were issued at $0.15 per share.

On December 27, 2012, the Company issued 689,053 shares of common stock in conversion of $100,000 of principle and $3,358 of accrued interest on notes payable. Shares were issued at $0.15; however, as set forth in the conversion terms included in the note agreement the shares were to be converted at a 25% discount of the closing price on the day of conversion, which was $0.35. As a result of converting the shares for the lesser value the Company recorded a loss on settlement of debt of $77,518. The loss was charged to additional paid in capital.

On December 27, 2012, the Company issued 2,167,045 shares of common stock to its CEO in conversion of $433,410 of accrued salary. Shares were issued at $0.15.

On February 28, 2013, the Company issued 166,666 shares of common stock for $25,000 cash. Shares were issued at $0.15 per share.

On April 16, 2013, the Company issued 166,666 shares of common stock for $25,000 cash. Shares were issued at $0.15 per share.

On July 10, 2013, the Company issued 75,000 shares of common stock for $25,000 cash. Shares were issued at $0.33 per share.

NOTE 5 - RELATED PARTY TRANSACTIONS

On December 27, 2012, the Company issued 2,167,045 shares of common stock to its CEO in conversion of $433,410 of accrued salary. Shares were issued at $0.15.

During the year ended December 31, 2012, the Company borrowed $100,000 from a stockholder, the full amount of which was converted to common stock on December 27, 2012. See note 7 for discussion of the terms of these notes.

During the quarter ended September 30, 2013, the Company borrowed $25,000 from a stockholder. The note bears interest at 10% per annum and is due within one year. As of September 30, 2013 the note has accrued interest of $651.

NOTE 6 – STOCK WARRANTS

A summary of the status of the Company’s outstanding stock warrants as of September 30, 2013 and changes during the periods is presented below:

	Warrant		Weighted Average Price
Outstanding, December 31, 2012		-	$	-

Issued		75,000		1.00
Exercised		-		-
Forfeited		-		-
Expired		-		-

Outstanding, September 30, 2013		75,000	$	1.00

Exercisable, September 30, 2013		75,000	$	1.00

		Outstanding						Exercisable
	Range of Exercise Prices	Number Outstanding at 9/30/2013		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable at 9/30/2013		Weighted Average Exercise Price

$	1.00		75,000		1.90	$	1.00		75,000	$	1.00

NOTE 7 - CONVERTIBLE NOTE AND DERIVATIVE LIABILITY

On June 10, 2012, the Company issued a $25,000 convertible note to a stockholder. 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 $8,333 based on the discount to market available at the time the note was issued. The discount is to be amortized over the life of the loan to interest expense. On December 27, 2012 the note was converted in full and the remainder of the unamortized debt discount was charged to interest expense.

On July 30, 2012, the Company issued a $25,000 convertible note to a stockholder. 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 $8,333 based on the discount to market available at the time the note was issued. The discount is to be amortized over the life of the loan to interest expense. On December 27, 2012 the note was converted in full and the remainder of the unamortized debt discount was charged to interest expense.

On September 14, 2012, the Company issued a $50,000 convertible note to a stockholder. 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 the note was issued. The discount is to be amortized over the life of the loan to interest expense. On December 27, 2012 the note was converted in full and the remainder of the unamortized debt discount was charged to interest expense.

NOTE 8 – 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, has an accumulated deficit of $13,981,726 and a working capital deficit of $269,401, 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 9 – SUBSEQUENT EVENTS

The company has evaluated subsequent events in accordance with the provisions of ASC 855 noting no reportable subsequent events.

PLAN OF OPERATION

Forward-Looking Statements

The information in this report contains forward-looking statements. All statements other than statements of historical fact made in report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,” “could,” “possibly,” “probably,” anticipates,” “projects,” “expects,” “may,” “will,” or “should” or other variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations.

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

Overview

We are an e-commerce service provider engaged in the development of software products and other services designed to help businesses sell products over the internet.

We 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”).

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

· ShopFast PC

· ShopFast DSD

· GHM Connect

· GHM Benefits

· Gift and Home Channel

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

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

Our plan of operation is to launch the marketing of the software component of our ShopFast PC product in the fourth quarter of 2013, to produce a 30 minute infomercial to promote this product, as well as a short form two minute commercial 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.

The purchase of the intangible assets in the prior year fits into the company's overall e-commerce strategy and future revenue growth.

We are currently redesigning ShopFast PC so that the Internet Storefront can be created by a client having limited computer expertise without our assistance. In previous versions of ShopFast DSD, the Internet Storefront would have had to have been created by an administrator employed by us. We are redesigning ShopFast PC so that the client can create the Internet Storefront on the client’s own, in the following five steps:

Step 1:

Choose the categories of items to be sold on the store.

Step 2:

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

Step 3:

Personalize the store by adding descriptive text

Step 4:

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

Step 5:

Final store confirmation and immediate store generation.

If we successfully test our Mobile commerce applications and product, we are then planning to develop or acquire additional products to complement the new mobile 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 to 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 new ShopFast Mobile POS 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 all internet browsers.

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.

Updated Services

The Company now aims to launch a new mobile commerce SaaS service within its existing framework to provide a turnkey solution to small retailers, merchant banks, and ISOs that are looking for a one-stop unified solution to their eCommerce, mCommerce, marketing, Point-of-Sale, and inventory management needs.

The ShopFast All In One unified solution and inventory management tool will be available to retailers and managed in a single dashboard. A small retailer will be able to get a POS system with a built-in CRM on an iPad or any tablet, and access the same POS on a computer from anywhere. There will be a multi-location system to manage inventory and track it by barcode and QR codes. This will enable coupons and loyalty programs for customers, as well as data feeds to all major search engines such as Google, Bing, and Yahoo.

We are also extremely excited to launch a new ‘White Label’ solution for Merchant Banks and ISOs as an integrated API to our system. Our solution will provide the merchant banks and ISOs with the tools to compete with payment solutions in the market place such as PayPal, Amazon Payments, Square, Google Checkout, and Intuit POS. Other online POS system offerings may appear similar to ours, but no competitor offers all of the tools we do, combined as a unified solution.

We started a pilot for one of the top 10 leading U.S. merchant banks, with revenues of over $16 billion, and over 200,000 Merchant clients to implement a group of merchants with all our Mobile Commerce services. We will be providing the inventory, marketing and gateway tools to the mobile applications of the bank and the merchant website. As mobile commerce, SaaS serves as part of the eCommerce suite of solutions.

New Products

PayAnywhereBills is a cloud-based system that allows users to bill customers online and accept payment by credit card and ACH. PayAnywhereBills simplifies billing and payments for small businesses while enabling operations to become more efficient. As only 30% of SMBs currently collect payments electronically, and more than half of these businesses name cash flow as their leading business challenge, the market potential for this service is immense. With PayAnywhereBills, business owners can utilize features such as recurring billing, web payment forms, credit card processing, email invoicing, and more. The SaaS-delivered service makes it easy to collect, track, invoice, and manage receivables on one user-friendly platform.

PayAnywhereAnything is an online payment acceptance SaaS solution that enables mobile acceptance of credit cards and features an easy-to-use POS system.

RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2013 AS COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2012

REVENUE

Revenue from operations for the three months ended September 30, 2013 decreased $7,320 or 24%, to $24,111 from $31,431 for the three months ended September 30, 2012. The decrease is mainly attributed to a decrease in revenue from the insurance program due to a combination of fewer subscribers and lower premiums.

GROSS PROFIT

Gross margin from operations for the three months ended September 30, 2013 decreased $447 to $18,674 from $19,121 for the three months ended September 30, 2012.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative ("G&A") expenses decreased by $49,038 or 56%, to $39,616 from $88,654 over the prior period as the Company attempted to limit its expenditures while developing new revenue sources.

NET LOSS

Net loss decreased by $124,435 to $92,089 from $216,524 for the three months ended September 30, 2013 as compared to the three months ended September 30, 2012. The decrease is a result in having no amortization expense to record and lower general and administrative expenses.

RESULTS OF OPERATIONS – NINE MONTHS ENDED SEPTEMBER 30, 2013 AS COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2012

REVENUE

Revenue from operations for the nine months ended September 30, 2013 decreased $23,888 or 25%, to $74,752 from $98,640 for the nine months ended September 30, 2012. The decrease is mainly attributed to a decrease in revenue from the insurance program due to a combination of fewer subscribers and lower premiums.

GROSS PROFIT

Gross margin from operations for the nine months ended September 30, 2013 decreased $11,707 to $48,608 from $60,315 for the nine months ended September 30, 2012.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative ("G&A") expenses decreased by $50,450 or 33%, to $104,689 from $155,139 over the prior period as the Company attempted to limit its expenditures while developing new revenue sources.

NET LOSS

Net loss decreased by $242,754 or 48% to $267,800 from $510,554 for the nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012. The decrease is a result in having no amortization expense to record and lower general and administrative expenses.

LIQUIDITY AND CAPITAL RESOURCES

During the nine months ended September 30, 2013, the Company used $106,256 of cash for operating activities and received $100,000 from financing activities.

The financial statements as of September 30, 2013 have been prepared under the assumption that we will continue as a going concern through December 31, 2013. Our independent registered public accounting firm has issued their report on the December 31, 2012 financial statements 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 financing in the past consisted 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. More recently the company has been able to fund its operations from revenue, stockholders’ loans and the sale of common stock.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of financial statements 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 and Cost Recognition

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.

Membership Fees

Commissions

Intangible Assets

ITEM 3. 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, as such, are not required to provide the information under this Item.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Control and Procedures

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 September 30, 2013 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 September 30, 2013 and December 31, 2012.

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.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to material affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

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

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On February 28, 2013, the Company issued 166,666 shares of common stock for $25,000 cash. Shares were issued at $0.15 per share.

On April 16, 2013, the Company issued 166,666 shares of common stock for $25,000 cash. Shares were issued at $0.15 per share.

On July 10, 2013, the Company issued 75,000 shares of common stock for $25,000 cash. Shares were issued at $0.33 per share.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Number		Exhibit Description

31.1		Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)

31.2		Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)

32		Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	By:	/s/ Ronny Yakov
Date: November 8, 2013	Name:	Ronny Yakov
	Title:	President and Interim Chief Financial Officer (Principal Executive Officer, Principal Financial and Accounting Officer)