S-1/A: DMINT, Inc. Files Amendment No. 3 to Form S-1 for Spin-Off Distribution

DMINT, Inc., a Bitcoin mining company, has filed an amendment to its Form S-1 registration statement in preparation for a spin-off distribution from its parent company, The OLB Group, Inc.

Summary

• DMINT, Inc., a wholly-owned subsidiary of The OLB Group, Inc. (OLB), has filed Amendment No. 3 to its Form S-1 registration statement.
• The company is preparing for a spin-off distribution of its common stock and Class A common stock to OLB's stockholders.
• OLB will distribute DMINT common shares and Class A shares to OLB stockholders on a pro rata basis.
• Stockholders of OLB will receive DMINT common shares and Class A shares for each share of OLB common stock owned at the close of business on a date to be determined.
• Fractional common shares will be aggregated and sold, with net cash proceeds distributed to holders.
• OLB will pay cash to each holder who would otherwise have been entitled to receive fractional Class A shares in the distribution.
• Shares held by Ronny Yakov, the chairman of DMINT and largest shareholder of OLB, and the Class A shares will be restricted from sale for six months after the distribution date.
• The Class A shares will automatically convert into common shares on the 180-day anniversary of the Distribution Date.
• DMINT has applied to list its common shares on NASDAQ.
• The company is an emerging growth company and may take advantage of reduced public reporting requirements.
• The Spin-Off Distribution is expected to be taxable to OLB's shareholders for U.S. federal income tax purposes.
• DMINT plans to expand its Bitcoin mining operations in two phases, aiming to operate up to 5,000 miners at its Tennessee facility.
• Phase one involves scaling from 400 to 1,000 miners by expanding power capacity to 20MW.
• Phase two involves scaling from 1,000 to 5,000 miners by purchasing an additional 4,000 miners.
• The company plans to purchase 4,000 new computers as soon as phase one is complete, assuming the Spin-Off Distribution occurs in the first half of 2025 and at least $16 million in capital is raised after the Spin-Off Distribution.
• Since commencing operations through December 31, 2024, the Company has mined a total of 57.74 Bitcoin.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While the spin-off and expansion plans are positive, the increased net loss and dependence on future capital raises introduce uncertainty.

Positives

• DMINT has a plan to expand its Bitcoin mining operations to 5,000 miners.
• The company owns its mining facility in Selmer, Tennessee.
• DMINT has secured agreements with Pickwick Electric Cooperative for up to 16,575 KW of electricity.
• The company has mined a total of 57.74 Bitcoin since commencing operations through December 31, 2024.

Negatives

• The Spin-Off Distribution is expected to be taxable to OLB's shareholders.
• The company is an emerging growth company and may take advantage of reduced public reporting requirements.
• The company does not have the cash necessary to pay for the installation of the equipment currently to allow our Tennessee Mining Facility to have such capabilities.
• 100 miners were impaired as of December 31, 2023, however we believe there is potential to repair the 100 miners and eventually use them in operations.

Risks

• The company's ability to expand its operations depends on raising capital after the spin-off.
• The company's common shares may not be approved for listing on NASDAQ.
• The company is an emerging growth company and may take advantage of reduced public reporting requirements.
• The company's Class A shares will not be listed on any securities exchange or trading system.
• The company's financial statements for the years ended December 31, 2024 and 2023 did not include a substantial doubt regarding our ability to continue as a going concern.
• The company may identify material weaknesses in our internal control over financial reporting.
• The company may not be able to integrate new technologies and provide new services in a cost-efficient manner.
• Disruptions in our equipment and infrastructure may result in loss of business, which could materially and adversely affect our reputation and business.
• The company must attract and retain skilled personnel.
• The company is dependent on the continued services and performance of our senior management and other key employees, the loss of any of whom could adversely affect our business, operating results and financial condition.
• The company has an evolving business model.
• The company may not be able to manage growth effectively, which could damage our reputation, limit our growth and negatively affect our operating results.
• The company may not be able to compete with other companies, some of whom have greater resources and experience.
• The Bitcoin network features a large and growing number of miners competing for limited mining rewards.
• Limited transaction capacity and scaling issues may impact mining results
• The properties included in our mining network may experience damages.
• The company depends on third parties to provide us with certain critical equipment and rely on components and raw materials that may be subject to price fluctuations or shortages, including ASIC chips that have been subject to an ongoing significant shortage.
• The company is exposed to risk of nonperformance by counterparties, including our counterparties under our power arrangements.
• Bitcoin mining activities are energy-intensive, which may restrict the geographic locations of miners and have a negative environmental impact.
• Bitcoin exchanges and other trading venues are relatively new and, in most cases, largely unregulated and may therefore be subject to fraud and failures.
• Our business may be significantly impacted by reputational risks and may impact how our business is perceived by customers, counterparties, and regulators.
• Regulatory changes or actions may alter the nature of an investment in us or restrict the use of Bitcoin in a manner that adversely affects our business, prospects or operations.
• The development and acceptance of Bitcoin and algorithmic protocols governing the issuance of and transactions in Bitcoin is subject to a variety of factors that are difficult to evaluate.
• Banks and financial institutions may not provide banking services, or may cut off services, to businesses that provide Bitcoinrelated services or that accept Bitcoin as payment, including financial institutions of investors in our securities.
• The impact of geopolitical events on the supply and demand for Bitcoin is uncertain.
• Acceptance and/or widespread use of Bitcoins is uncertain.
• Political or economic crises may motivate large-scale sales of Bitcoins, which could result in a reduction in value and adversely affect us.
• Transactional fees may decrease demand for Bitcoin and prevent expansion.
• Bitcoin inventory, including that maintained by or for us, may be exposed to cybersecurity threats and hacks.
• Macro-market events or perception of the Bitcoin industry in general could negatively impact our financial condition.
• It may be illegal in the future, to acquire, own, hold, sell or use Bitcoin, participate in the blockchain or utilize similar digital assets in one or more countries, the ruling of which would adversely affect us.
• If regulatory changes or interpretations require the regulation of Bitcoin or other digital assets under the securities laws of the United States or elsewhere, including the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 or similar laws of other jurisdictions and interpretations by the SEC, CFTC, IRS, Department of Treasury or other agencies or authorities, we may be required to register and comply with such regulations, including at a state or local level.
• Lack of liquid markets, possible manipulation of blockchain/Bitcoin-based assets and lack of effectiveness of safeguards for our Bitcoin may adversely affect us.
• If federal or state legislatures or agencies initiate or release tax determinations that change the classification of Bitcoin as property for tax purposes (in the context of when such Bitcoin are held as an investment), such determination could have a negative tax consequence on our Company or our shareholders.
• Our dependence on third-party software and personnel may leave us vulnerable to price fluctuations and rapidly changing technology.
• OLB may default on a Master Equipment Finance Agreement and we may lose 100 mining computers pledged as collateral.
• Failure to comply with, or changes in, laws, regulations and enforcement activities may adversely affect the products, services and markets in which we operate.
• Our common shares and Class A shares have never been publicly traded and there is no existing market for our common shares or Class A shares. An active trading market that will provide you with adequate liquidity for our common shares or Class A shares may not develop.
• Following the Spin-Off Distribution, the aggregate trading value of DMINT common shares and OLB common stock may be less than the trading value of OLBs common stock before the Spin-Off Distribution.
• If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.
• Substantial sales of our common shares may occur in connection with the Spin-Off Distribution, which could cause our share price to decline.
• You may experience future dilution as a result of future equity offerings and other issuances of our common shares, preferred shares or other securities.
• The market price of our common shares may be subject to significant fluctuations.
• If our common shares do not meet NASDAQs minimum share price requirement, and if we cannot cure such deficiency within the prescribed timeframe, our common shares could be delisted.
• We are an emerging growth company and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common shares less attractive to investors.
• Our historical financial information may not be representative of the results we would have achieved as a stand -alone public company and may not be a reliable indicator of our future results.
• We may have difficulty operating as an independent, publicly traded company.
• As an independent, publicly traded company, we may not enjoy the same benefits that it did as part of OLB.
• Our ability to meet our capital needs may be harmed by the loss of financial support from OLB.
• As a newly-incorporated company, we may not have the surplus or net profits required by law to pay dividends.
• We believe that the Spin-Off Distribution generally will be taxable to our shareholders for U.S. federal income tax purposes.
• Certain of our directors and executive officers are director and/or executive officers of OLB and own shares of its common stock, which could cause conflicts of interests.
• As an emerging growth company under applicable law, we will be subject to lessened disclosure requirements, which could leave our stockholders without information or rights available to stockholders of more mature companies.

Future Outlook

DMINT plans to expand its Bitcoin mining operations in two phases, aiming to operate up to 5,000 miners at its Tennessee facility. The company plans to purchase 4,000 new computers as soon as phase one is complete, assuming the Spin-Off Distribution occurs in the first half of 2025 and at least $16 million in capital is raised after the Spin-Off Distribution.

Management Comments

• OLB believes that its lines of business are not accurately valued in the capital market, and the Spin-Off Distribution will enable each company (OLB and DMINT) to increase its business focus, alleviate market confusion and attract new investors.
• In determining whether to effect the Spin-Off Distribution, the board of directors of OLB considered the costs and risks associated with the transaction, including those associated with preparing DMINT to become a separate publicly traded company and the possibility that the trading value of the two separate entities after the Spin-Off Distribution may be less than the trading value of OLBs common stock before the Spin-Off Distribution.
• Notwithstanding these costs and risks, the board of directors of OLB determined that a spin-off, in the form contemplated by the Spin-Off Distribution is in the best interests of OLB and its stockholders.

Industry Context

The document describes a spin-off within the Bitcoin mining industry, where companies are increasingly seeking to separate different business segments to enhance focus and attract specific investors. This is in line with the broader trend of specialization and value unlocking in the cryptocurrency market.

Comparison to Industry Standards

• DMINT's strategy of focusing on Bitcoin mining in the United States aligns with the trend of companies seeking stable regulatory environments.
• The company's plan to expand its mining operations to 5,000 miners is comparable to other mid-sized Bitcoin mining companies.
• DMINT's reliance on a single mining pool (Foundry USA) is a common practice, but it also introduces concentration risk.
• The company's operational cost from June 2023 to December 2024 of $0.072 per kWh is lower than the national average in the industrial section as of December 2024 of approximately $0.124 per kWh ( reflecting its efficiency and cost-effective operations in power services.

Legal Proceedings

• The Company is currently in a contract dispute with a contractor.

Related Party Transactions

• Since inception the cost of the Companys operations has been solely funded by The OLB Group, Inc., and its subsidiaries.
• On December 22, 2023, OLB and DMINT entered into a Shared Services Agreement (the SSA) whereby OLB provides financial and accounting services and tax related services to DMINT (the Services).

Stakeholder Impact

• OLB stockholders will receive DMINT common shares and Class A shares on a pro rata basis.
• The Spin-Off Distribution is expected to be taxable to OLB's shareholders.
• DMINT's future performance will impact the value of the distributed shares.

Next Steps

• OLB's Board of Directors must approve the Spin-Off Distribution.
• DMINT must obtain approval for its common shares to be listed on NASDAQ.
• The registration statement must be declared effective by the SEC.
• DMINT plans to expand its Bitcoin mining operations in two phases.
• The company plans to purchase 4,000 new computers as soon as phase one is complete, assuming the Spin-Off Distribution occurs in the first half of 2025 and at least $16 million in capital is raised after the Spin-Off Distribution.

Key Dates

Keywords

DMINT, OLB, Bitcoin mining, Spin-Off Distribution, NASDAQ, Common stock, Class A common stock, Mining computers, Cryptocurrency, Blockchain