Onfolio Holdings, Inc S-1, filed Aug 22, 2025
Onfolio Holdings, Inc (ONFO)
As filed with the U.S. Securities and Exchange Commission on August 22, 2025
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
| ONFOLIO HOLDINGS INC. |
| (Exact name of registrant as specified in its charter) |
| Delaware |
| 7370 |
| 37-1978697 |
| (State or Other jurisdiction of incorporation or organization) |
| (Primary Standard Industrial Classification Code Number) |
| (I.R.S. Employer Identification Number) |
Dominic Wells
Chief Executive Officer
1007 North Orange Street, 4th Floor
Wilmington, Delaware 19801
(682) 990-6920
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Northwest Registered Agent Service, Inc.
8 The Green, Ste B
Dover, DE 19901
302-581-4070
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
David M. Bovi, Esq.
David M. Bovi, P.A.
2855 PGA Blvd., Suite 150
Palm Beach Gardens, FL 33410
(561) 655-0665
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
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| Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
EXPLANATORY NOTE
This registration statement relates to 6,199,863 shares of common stock of Onfolio Holdings Inc. (the “Company”) issuable upon the exercise of 6,117,250 outstanding publicly-traded warrants and 82,613 representative’s warrants previously issued by the Company. These shares were previously registered on the Company’s Registration Statement on Form S-1 (File No. 333-264191),which was declared effective by the Securities and Exchange Commission on August 25, 2022 (the “Initial Registration Statement”). The Initial Registration Statement related to the Company’s initial public offering and registered (i) 2,753,750 shares common stock; (ii) 6,117,250 warrants with each warrant exercisable to purchase one share of our common stock at an exercise price equal to $5.00 (the “publicly-traded warrants”); and (ii) an underwriter’s warrant to purchase 82,613 shares of the Company’s common stock at an exercise price of $5.50 that was issued to EF Hutton, division of Benchmark Investments, LLC (the “representative’s warrants”). No shares of common stock issuable upon the exercise of the outstanding publicly-traded warrants and representative’s warrants were sold under the Initial Registration Statement or any post-effective amendment thereto. On August 5, 2025, the Company filed a post-effective amendment to deregister all unsold securities under the Initial Registration Statement, which included all 6,199,863 shares of common stock issuable upon the exercise of the outstanding publicly-traded warrants and representative’s warrants, which became effective on August 7, 2025.
The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED AUGUST 22, 2025
PRELIMINARY PROSPECTUS
ONFOLIO HOLDINGS INC.
6,199,863 Shares of Common Stock Issuable Upon the Exercise of Warrants
__________________________
This prospectus relates to 6,199,863 shares of common stock issuable upon the exercise of warrants including 6,117,250 shares of common stock issuable upon exercise of warrants issued to investors in our initial public offering (the “publicly-traded warrants”) and 82,613 of common stock issuable upon the exercise of warrants issued to the representative of the underwriters in our initial public offering (the “representative’s warrants”). The publicly-traded warrants and the representative’s warrants are each exercisable immediately and will remain exercisable at any time up to August 30, 2027.
Upon any exercise of the publicly-traded warrants and representative’s warrants by payment of cash, we will receive the exercise price of the warrants, which, if exercised in cash would result in gross proceeds to us of approximately $31.0 million. However, we cannot predict when and in what amounts or if the warrants will be exercised by payments of cash, and it is possible that the warrants may expire and never be exercised, in which case we would not receive any cash proceeds.
Our common stock and publicly-traded warrants are listed and traded under the symbols “ONFO” and “ONFOW,” respectively, on the Nasdaq Capital Market. On August 21, 2025, the closing/last price of our common stock and publicly-traded warrants on the Nasdaq Capital Market was $1.045 and $0.1893, respectively.
We are an “emerging growth company” under applicable federal securities laws and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings.
Investing in our shares of common stock and publicly-traded warrants (collectively, “securities”) involves a high degree of risk. See the section of this prospectus entitled “Risk Factors” beginning on page [ ] for a discussion of information that should be considered in connection with an investment in our securities.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is [____], 2025.
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Please read this prospectus carefully. It describes our business, financial condition, results of operations and prospects, among other things. We are responsible for the information contained in this prospectus and in any free-writing prospectus we have authorized. We have not authorized anyone to provide you with different information, and we take no responsibility for any other information others may give you. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus is accurate only as of the date on the front of this prospectus, regardless of the time of delivery of this prospectus or any sale of securities. You should not assume that the information contained in this prospectus is accurate as of any date other than its date.
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| Table of Contents |
ABOUT THIS PROSPECTUS
In this prospectus, unless the context suggests otherwise, references to “our Company,” “Onfolio”, “we,” “us,” and “our” refer to Onfolio Holdings Inc., a Delaware corporation, and its subsidiaries.
This prospectus describes the specific details regarding this offering, the terms and conditions of the shares being offered hereby and the risks of investing in our Company’s securities. You should read this prospectus and the additional information about our Company described in the section entitled “Where You Can Find More Information” before making your investment decision.
Neither our Company, nor any of its officers, directors, agents, or representatives make any representation to you about the legality of an investment in our Company’s securities. You should not interpret the contents of this prospectus to be legal, business, investment or tax advice. You should consult with your own advisors for that type of advice and consult with them about the legal, tax, business, financial and other issues that you should consider before investing in our Company’s securities.
Trademarks and Trade Names
This prospectus includes trademarks that are protected under applicable intellectual property laws and are our Company’s property. This prospectus also contains trademarks, service marks, trade names and/or copyrights of other companies, which are the property of its owners. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that our Company will not assert, to the fullest extent under applicable law, its rights or the right of the applicable licensor to these trademarks and trade names.
Industry And Market Data
Unless otherwise indicated, information contained in this prospectus concerning our Company’s industry and the markets in which it operates, including market position and market opportunity, is based on information from management’s estimates, as well as from industry publications and research, surveys and studies conducted by third parties. The third-party sources from which our Company has obtained information generally state that the information contained therein has been obtained from sources believed to be reliable, but our Company cannot assure you that this information is accurate or complete. The Company has not independently verified any of the data from third-party sources nor has it verified the underlying economic assumptions relied upon by those third parties. Similarly, internal company surveys, industry forecasts and market research, which our Company believes to be reliable, based upon management’s knowledge of the industry, have not been verified by any independent sources. The Company’s internal surveys are based on data it has collected over time, which it believes to be reliable. Management estimates are derived from publicly available information, its knowledge of the industry, and assumptions based on such information and knowledge, which management believes to be reasonable and appropriate. However, assumptions and estimates of our Company’s future performance, and the future performance of its industry, are subject to numerous known and unknown risks and uncertainties, including those described under the heading “Risk Factors” in this prospectus and those described elsewhere in this prospectus, and the other documents our Company files with the Securities and Exchange Commission, or SEC, from time to time. These and other important factors could result in its estimates and assumptions being materially different from future results. You should read the information contained in this prospectus completely and with the understanding that future results may be materially different and worse from what our Company expects. See the information included under the heading “Forward- Looking Statements.”
For Investors Outside The United States
We have done nothing that would permit this offering, or possession or distribution of this prospectus, in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of our common stock and the distribution of this prospectus outside of the United States. See the section of this prospectus entitled “Plan of Distribution” for additional information on these restrictions.
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The following summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read this entire prospectus carefully, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Company’s historical financial statements and related notes included elsewhere in this prospectus. In this prospectus, unless otherwise noted, the terms “our Company,” “Onfolio” “we,” “us,” and “our” refer to Onfolio Holdings Inc. and its subsidiaries.
OVERVIEW
Company Overview
We acquire controlling interests in and actively manage online businesses that we believe (i) operate in sectors with long-term growth opportunities, (ii) have positive and stable cash flows, (iii) face minimal threats of technological or competitive obsolescence and (iv) can be managed by our existing team or have strong management teams largely in place. Through the acquisition and growth of a diversified group of websites with these characteristics, we believe we offer investors in our shares an opportunity to diversify their own portfolio risk.
Our long-term goal is to build a world-class holding company that acquires, operates, and scales profitable online businesses. We aim to do this through operational excellence, smart capital deployment, strong leadership and infrastructure, and the maintenance of an innovator and small business owner’s mindset.
Our ideal acquisition candidate has the following characteristics:
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| · | Proven customer acquisition track record; |
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| · | A product, physical or digital with satisfied customers and brand equity; |
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| · | Upwards growth trajectory; |
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| · | Growing industry or sector; |
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| · | Attractive purchase price; |
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| · | Under-utilized marketing assets or channels; |
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| · | Passionate, high-value audience or customer base; |
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| · | Attractive profit margin and cashflow; and |
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| · | Diversified traffic and revenue sources. |
We currently operate in the following business models: D2C eCommerce, B2B SEO and marketing services as well as B2B digital products. We anticipate a combination of continuous expansion of these verticals and increasing our share within them. Our business model is not based around success in a particular “niche”, but rather focusing on certain verticals and mediums where online marketing has a key part to play (either as a means of growth for the businesses themselves, or as the service the businesses provide).
The Company’s wholly-owned subsidiaries are Onfolio LLC, Vital Reaction, LLC, Mighty Deals LLC, Onfolio Assets, LLC, Onfolio Management, LLC, WP Folio, LLC, Proofread Anywhere, LLC, Contentellect, LLC, SEO Butler Limited, DealPipe, LLC and Pace Generative LLC. The Company also maintains majority ownership in DDS Rank, LLC, RevenueZen, LLC, and Eastern Standard, LLC which are owned 66%, 88%, and 53% respectively, by the Company as of June 30, 2025.
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Market Opportunity
We acquire controlling interests in and actively manage small online businesses. We characterize small online businesses as those that generate annual cash flows of up to $5 million per year. We believe that the acquisition market for these online businesses is highly fragmented and often provides opportunities to purchase at attractive prices and achieve positive outcomes for our shareholders. We believe this is driven by the following factors:
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| · | third-party financing for these acquisitions is often less available or terms are less favorable for the borrower; |
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| · | sellers of these online businesses frequently consider non-economic factors, such as legacy or the effect of the sale on their employees; |
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| · | these online businesses are more likely to be sold outside of an auction process or as part of a limited process“ add-on” acquisitions can often be completed at attractive multiples of cash flow |
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| · | many would-be buyers of these online businesses are restricted by their inability to operate these online businesses; and |
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| · | the existence of a sweet spot where online businesses are too big for small/individual buyers and too small for other institutional buyers. We desire to be among the best resourced and most experience buyers in this acquisition sector. |
Our Strategy
In seeking to maximize shareholder value, we focus on finding online businesses with under-utilized marketing assets, strong growth, and areas of operational improvements. We then accelerate what is working and fix what is not.
Acquisition Strategy
Our strategy to grow our business involves the acquisition of online businesses that we expect to both complement existing verticals, existing online businesses, and allow us to add new verticals. We are experienced in digital marketing and believe the key to growing online businesses is the leverage of audiences. We believe that attractive opportunities to make such acquisitions will continue to present themselves as a result of the abundance of selling founders with a limited skillset or narrow focus. This provides us with an opportunity for optimization and growth in the average small online businesses that is for sale. We benefit from our management team’s ability to identify diverse acquisition opportunities in a variety of industries. In addition, we rely upon our management team’s experience and expertise in researching and valuing prospective target online businesses, as well as negotiating the ultimate acquisition of such target website.
Management Strategy
Our management strategy involves a combination of sharing resources across online businesses, and employing dedicated managers of individual online businesses. We set clear objectives for our businesses in collaboration with individual managers, and then entrust them with the autonomy to execute strategic decisions within these established parameters. We support them where necessary, but otherwise empower these subject matter experts with the operational freedom to grow the online businesses in line with their responsibilities and our shared objectives.
Our management strategy involves a combination of sharing resources across online businesses and employing dedicated managers of individual online businesses. We set clear objectives for our businesses in collaboration with individual managers and then entrust them with autonomy to execute strategic decisions within these established parameters. We support them where necessary but otherwise empower these subject matter experts with the operational freedom to grow the online businesses in line with their responsibilities and our shared objectives.
Our Online Businesses
As of the date of this prospectus, we own and/or manage the following 20 online businesses:
Pace Generative LLC – Own
In May 2025, we formed Pace Generative LLC, a start-up Generative Engine Optimization service that help brands appear in AI-generated answers, which is a rapidly emerging opportunity in digital discovery and trust-building. Pace Generative helps brands increase their visibility and traffic from AI answer engines, such as Google AI overviews, ChatGPT, Perplexity, and Grok. By using traditional content marketing, SEO, and PR techniques, along with new proprietary methods, Pace Generative helps optimize businesses for generative engine optimization. Our Company holds a 100% ownership stake in Pace Generative.
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Eastern Standard - Own
In October 2024, we acquired Eastern Standard, a premier digital agency specializing in brand strategy, website development, and digital marketing. Eastern Standard provides tailored solutions across various industries, helping clients enhance their online presence through strategic branding, search engine optimization (SEO), and user-focused design. Our Company holds a 53% ownership stake in Eastern Standard, while the OA SPVs maintain a 37% equity interest, and the Eastern Standard founders maintain a 10% roll-over equity interest and continue to serve in leadership roles on the Eastern Standard team.
DDSrank.com - Own
In June 2024, we acquired DDS Rank, an online service provider that works with dental professionals to grow their online presence and patient base. DDS Rank offers digital marketing services such as search-engine optimization, paid advertising, and web design. DDS Rank enjoys a strong reputation in its field, specializing in helping dentists improve search engine visibility and attract more patients. Our Company holds a 66% ownership stake in DDS Rank, while OA SPV maintains a 34% equity interest.
RevenueZen.com - Own
In January 2024, we acquired RevenueZen.com, an online service provider that works with B2B brands to grow their organic and referral traffic. ReveueZen offers B2B marketing services such as search-engine optimization, Linkedin marketing and content marketing. RevenueZen enjoys a strong reputation in its field, specializing in working with startups, healthcare, professional services, renewable energy, and financial services businesses, among others. Our Company holds an 88% ownership stake in RevenueZen, while RevenueZen founders received a 12% roll-over equity interest and will serve in leadership roles in the Onfolio-owned RevenueZen team.
Contentellect.com -Own
In January 2023, we acquired Contentellect.com. Contentellect helps small-and medium-sized businesses scale their content with blog writing, link building, and more. The service offering consists of online (i) content writing services (including white label content creation, eBook writing and eCommerce product description writing), (ii) website link building services (including white label link building, HARO link building and SEO outreach services), (iii) social media marketing services, and (iv) virtual assistant services to individuals, businesses and agencies. The content created helps customers by improving organic traffic via search engines, enables them to conduct thought-leadership, and gives sales and marketing teams relevant and usable content at the top and middle of the marketing funnel. Our Company holds a 100% ownership stake in Contentellect.com.
ProofreadAnywhere.com/WorkAtHomeSchool.com/WorkYourWay2020.com - Own
In October 2022, we acquired ProofreadAnywhere.com/WorkAtHomeSchool.com/WorkYourWay2020.com, which provide extensive online resources in the form of courses, workshops and blog posts for readers looking to train and become professional proofreaders. The curriculum helps users spot common errors, catch grammatical mistakes, and in turn, improve their proofreading skills and launch new careers. These online businesses also sell digital books covering several topics such as writing skills and freelancer taxation, and generate revenue through their courses, workshops, and eBook sales, each sold individually and in bundles. Our Company holds a 100% ownership stake in ProofreadAnywhere.com / WorkAtHomeSchool.com / WorkYourWay2020.com.
SEOButler.com - Own
In October 2022, we acquired SEOButler.com, an online provider of extensive products within the SEO niche including content, guest posting, social signals, and citations. The website deploys a custom-built Order Management System (OMS), designed to make the content creation process highly scalable while eliminating the bottlenecks that could otherwise impede the growth of a productized service business that relies primarily on human writers and editors. Our Company holds a 100% ownership stake in SEOButler.com.
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Mightydeals.com – Own
In January 2021, we acquired Mightydeals.com and its related domain names. Mightydeals.com is a vendor of design bundles and deals for freelance designers, agencies, hobbyists and solopreneurs. The online business works with creators of design templates, fonts, software, and training (the vendors) and offers their works at steep discounts. It then shares the revenue with the vendors. Our Company holds a 100% ownership stake in Mighty Deals LLC, which owns Mightydeals.com.
Vital-Reaction.com – Own
In December 2020, we acquired Vital-Reaction.com. Vital-Reaction.com is an online supplements business providing molecular hydrogen tablets, clinical and retail inhalers, dermal therapy devices, grounding mats, and other related products. The online business operates out of Boulder, Colorado, and ships across the U.S. and internationally. Products are sourced from within the US, Japan, and China. Customers range from retail customers to U.S. clinicians and doctors who resell or refer customers. Our Company holds a 100% ownership stake in Vital Reaction LLC, which owns Vital-Reaction.com.
Allthingsdogs.com – Own
In December 2020, we acquired Allthingsdogs.com. Allthingsdogs.com is a publishing website in the pet dog vertical. It publishes informational articles related to every breed of dog. The information ranges from how to care for a certain breed, to the best types of dog food, to training tips. As well as advertising revenue, the website earns money from I’ve affiliate commissions and sales of its own ebooks and informational products. This website is one of our three online businesses in the dog vertical, providing us with significant growth opportunities and operational efficiencies, plus economies of scale as we offer digital products, physical products, and work with key vendors in the industry. As our audience grows into the hundreds of thousands across the Allthingsdogs.com, Woofwhiskers.com and Perfectdogbreeds.com sites, we expect the pet dog aspect of our portfolio to grow in stature and revenue. Our Company holds a 100% ownership stake in Allthingsdogs.com.
DealPipe.io - Own
In November 2023, we launched DealPipe, a service for sourcing "off-market" acquisition targets. Dealpipe utilizes our Company’s experience sourcing off-market deals for ourselves, offering this service to others. The DealPipe team is excited to help serial acquirers find online or offline businesses to add to their portfolios, and to help business owners find good homes for their businesses. Dealpipe earns monthly retainers, plus a success fee based on a percentage of the successful acquisition price, creating a lucrative business model. Our Company holds a 100% ownership stake in DealPipe.io
Fishkeepingworld.com – Manage/Own
In January 2020, we began to manage Fishkeepingworld.com. Fishkeepingworld.com is a publishing website in the ornamental fish and aquarium space. It provides information for hobbyists on how to care for their fish, maintain their tank, and level up their hobby. Our Company holds a 13.63% ownership stake in Onfolio JV I, LLC, which owns Fishkeepingworld.com and we receive a management fee of $2,500 per month and 50% profit share of any profits above $12,500 per month for managing this website. For example, if the website produced $2,000 net profit per month before we started managing it, and it produced $3,000 per month afterwards, we would receive 50% of the additional $1,000.
Asubtlerevelry.com – Manage/Own
In January 2020, we began to manage Asubtlerevelry.com. Asubtlerevelry.com covers topics ranging from hosting a house party, to bachelorette party ideas, to recipes, to crafts. The site is a pure content and display advertising site. Long term, the site is forming a strong part of the growing craft/DIY vertical that several of our other managed sites are in. Our Company holds a 10.70% ownership stake in Onfolio JV II LLC, which owns Asubtlerevelry.com and we receive a management fee of $1,500 per month and 50% profit share of any profits above $16,500 for managing this website. For example, if the website produced $2,000 net profit per month before we started managing it, and it produced $3,000 per month afterwards, we would receive 50% of the additional $1,000.
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Wowfreestuff.co.uk – Manage/Own
In April 2020, we began to manage Wowfreestuff.com. Wowfreestuff.com has a large audience of hundreds of thousands of people in the UK who want to be notified when companies do freebies and giveaways. Many of these companies pay a commission to the site to help promote their freebies. Our Company holds a 13.59% ownership stake in Onfolio JV III LLC, which owns Wowfreestuff.com and we receive a management fee of $3,000 per month and 50% profit share of any profits above $16,500 for managing this website. For example, if the website produced $2,000 net profit per month before we started managing it, and it produced $3,000 per month afterwards, we would receive 50% of the additional $1,000.
Woofwhiskers.com – Manage/Own
In June 2020, we began to manage Woofwhiskers.com. Woofwhiskers.com is a website reviewing dog food, providing high quality reviews, and receiving lucrative referral fees from dog food companies. The dog food space is competitive, and vendors build strong relationships with high quality publishers to help promote their brands. Woofwhiskers.com is one such website which enjoys strong relationships in the space. Over time, Woofwhiskers.com is building its own audience of dog lovers and will launch its own digital products, and eventually physical products. This website is one of our three online businesses in the dog vertical, providing us with significant growth opportunities and operational efficiencies, plus economies of scale as we offer digital products, physical products, and work with key vendors in the industry. As our audience grows into the hundreds of thousands across the Allthingsdogs.com, Woofwhiskers.com and Perfectdogbreeds.com sites, we expect the pet dog aspect of our portfolio to grow in stature and revenue. These online businesses earn revenue from display advertising and from affiliate commissions. Our Company holds a 35.8% ownership stake in Onfolio JV IV LLC, which owns Woofwhiskers.com and Perfectdogbreeds.com.
Perfectdogbreeds.com – Manage/Own
In October 2020, we began to manage Perfectdogbreeds.com. Perfectdogbreeds.com is a guide to owning all the different breeds of dogs in existence. Similar to Allthingsdogs.com (which focuses on care guides), Perfectdogbreeds.com earns money from display advertising, and its high traffic volume makes this is a lucrative monetization option. This website is one of our three online businesses in the dog vertical, providing us with significant growth opportunities and operational efficiencies, plus economies of scale as we offer digital products, physical products, and work with key vendors in the industry. As our audience grows into the hundreds of thousands across the Allthingsdogs.com, Woofwhiskers.com and Perfectdogbreeds.com sites, we expect the pet dog aspect of our portfolio to grow in stature and revenue. The website earns revenue from display advertising. Our Company holds a 35.8% ownership stake in Onfolio JV IV LLC, which owns Woofwhiskers.com and Perfectdogbreeds.com.
Craftwhack.com – Manage/Own
In May 2020, we began to manage Craftwhack.com. Craftwhack.com is a website with free content teaching people how to perform certain arts and crafts. It earns revenue from affiliate commissions and display advertising. Similar to the dog vertical, we manage or own numerous sites in the crafting/DIY/home vertical, and plan to continue growing and improving our presence in the space. Audiences are passionate in this industry, and our skills in content publishing, eCommerce, and digital products gives us ample opportunity to add value and grow revenues in the space. As we now have more presence and more of our owned products in the space, we plan to use Craftwhack.com to continue to grow revenues across the portfolio and generate profits in its own right. Our Company receives 20% of free cash flows for managing this website and we hold a 20% ownership stake in Onfolio Groupbuild 1 LLC, which owns Craftwhack.com.com and BackgroundHawk.com.
Backgroundhawk.com – Manage/Own
In October 2020, we began to manage Backgroundhawk.com. Backgroundhawk.com is a review website and sits squarely in the growing and lucrative background check and legal check industry. Our Company receives 20% of free cash flows for managing this website. Our Company receives 20% of free cash flows for managing this website and we hold a 20% ownership stake in Onfolio Groupbuild 1 LLC, which owns Craftwhack.com.com and BackgroundHawk.com.
Outreachmama.com – Manage
In November 2020, we began to manage Outreachmama.com. Outreachmama.com is an SEO/content marketing services online business working with individuals and agencies to grow their presence in Google.com. The owners of this online business are also Onfolio shareholders. Our Company receives a profit share of 50% of growth of profits above what the site was earning on average before we began managing it, plus a management fee of $4,000 per month. Outreachmama.com is one of our two online businesses in the SEO vertical, providing us with significant growth opportunities and operational efficiencies, plus economies of scale. Onfolio sometimes makes use of these services too.
Getmerankings.com – Manage
In October 2021, we began to manage Getmerankings.com. Getmerankings.com is another SEO/content marketing online business. The owners of this online business are also Onfolio shareholders. Our Company receives a profit share of 50% of growth of profits above what the site was earning on average before we began managing it plus a management fee of $4,000 per month for managing this online business. Getmerankings.com is one of our two online businesses in the SEO vertical, providing us with significant growth opportunities and operational efficiencies, plus economies of scale. Onfolio will likely make use of these services too.
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2023 and 2024 Divestitures and Impairments
In January 2023, the Company shut down the business operations of Digitallyapproved.com, which offered a newsletter on social media marketing, and a Pinterest management agency.
In November 2023, the Company shut down the business operations of Prettyneatcreative.com, an eCommerce business in the diamond painting niche.
During the year ended December 31, 2023, the Company recognized impairment losses of $2,642,649 related to the BCP Media Acquisition, $580,284 related to the BWPS Acquisition, and $903,897 related to the SEO Butler Acquisition, $700,000 related to Mighty Deals website domains and $84,000 related to Pretty Neat Creative, operating under Onfolio Crafts LLC, and $105,937 related to various website domains operating under Onfolio Assets LLC for total aggregate impairment of $5,016,765 related to the above acquisitions, as a result of lower than expected cash flows from the acquired businesses and an increase in interest rates leading to a higher discount rate used.
In December 2024, the Company sold the business operations of BWPS (“WPFolio LLC)” for $780,000 in an all-cash transaction to align the wider portfolio more closely with the growing B2B agency and information products business lines.
Implications of being an Emerging Growth Company and a Smaller Reporting Company
As a company with less than $1.235 billion in revenue during its most recently completed fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”). As an emerging growth company, we may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include:
| ● | Reduced disclosure about the Company’s executive compensation arrangements; | |
| ● | Exemptions from non-binding shareholder advisory votes on executive compensation or golden parachute arrangements; | |
| ● | The Company’s election under Section 107(b) of the Jumpstart Our Business Startups Act of 2012 to delay adoption of new or revised accounting standards with different effective dates for public and private companies until those standards would otherwise apply to private companies; and | |
| ● | An exemption from the auditor attestation requirement under Section 404(b) of the Sarbanes-Oxley Act of 2002 in respect of management’s assessment of the Company’s internal control over financial reporting, which requirement would otherwise apply if we ceased to qualify as a smaller reporting company under the rules of the SEC. |
We may take advantage of these accommodations until the last day of the fiscal year following the fifth anniversary of the date on which it first sells common equity securities pursuant to a registration statement under the Securities Act, or such earlier time that we are no longer an emerging growth company. We will remain an “emerging growth company” until the earliest of (a) the last day of the first fiscal year in which our annual gross revenues exceed $1.235 billion, (b) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, (c) the date on which we have issued more than $1.0 billion in nonconvertible debt during the preceding three-year period or (d) the last day of our fiscal year containing the fifth anniversary of the date on which we completed our initial public offering of securities.
We cannot predict whether investors will find our common stock less attractive because we rely upon certain of these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our common stock price may be more volatile. On the other hand, if we no longer qualify as an emerging growth company, we would be required to divert additional management time and attention from the Company’s development and other business activities and incur increased legal and financial costs to comply with the additional associated reporting requirements, which could negatively impact our Company’s business, financial condition and results of operations.
We are also a smaller reporting company as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) the market value of our voting and non-voting common stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our voting and non-voting common stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter. Specifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Reports on Form 10-K and have reduced disclosure obligations regarding executive compensation, and, as long as we are a smaller reporting company with less than $100 million in annual revenue, we are not required to obtain an attestation report on internal control over financial reporting from our independent registered public accounting firm.
We may choose to take advantage of some or all of these exemptions. We have taken advantage of reduced reporting requirements in this prospectus. Accordingly, the information contained herein may be different from the information you receive from other public companies in which you hold stock.
Corporate History and Information
Onfolio Holdings, Inc. was incorporated on July 20, 2020 under the laws of Delaware to acquire and development high-growth and profitable internet businesses. The Company primarily earns revenue through website management, advertising and content placement on its online businesses, and product sales on certain sites. We own multiple online businesses and manage online businesses on behalf of certain unconsolidated entities in which we hold equity interests. Our Company operates in two business segments: Business to Business (“B2B”) and Business to Consumer (“B2C). We consider our space at 1007 North Orange Street, 4th Floor Wilmington, Delaware 19801 to be our principal executive office. Our telephone number is (682) 990- 6920.
| 8 |
| Table of Contents |
SUMMARY OF RISK FACTORS
Our business and our ability to execute our business strategy are subject to a number of risks of which you should be aware of before you decide to buy our securities. In particular, you should carefully consider the following risks, which are discussed more fully in the section entitled “Risk Factors” beginning on page 14 of this prospectus:
|
| · | We are a company with limited history and may not be able to continue to successfully manage our websites on a combined basis; |
|
| · | Many of our websites have a limited operating history upon which investors can evaluate their future prospects; |
|
| · | Revision of previously issued consolidated financial statements. |
|
| · | We have incurred operating losses since our inception and we may continue to incur substantial operating losses for the foreseeable future. |
|
| · | Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern; |
|
| · | We require additional capital to support our present business plans and our anticipated business growth, and such capital may not be available on acceptable terms, or at all, which would adversely affect our ability to operate; |
|
| · | We cannot predict our future capital needs and we may not be able to secure additional financing; |
|
| · | If we fail to retain certain of our key personnel and attract and retain additional qualified personnel, we might not be able to pursue our growth strategy; |
|
| · | The need to sustain our current operating structure may place a significant strain on our management and our administrative, operational and financial reporting infrastructure; |
|
| · | Negative publicity could adversely affect our reputation, our business, and our operating results; |
|
| · | Natural disasters and other events beyond our control could materially adversely affect us; |
|
| · | Political and economic factors may negatively affect our financial condition or results of operations; |
|
| · | We face risks from artificial intelligence; |
|
| · | Our use of artificial intelligence and machine learning technologies could adversely affect our products and services, harm our reputation, or cause us to incur liability resulting from harm to individuals or violation of laws and regulations or contracts to which we are a party; |
|
| · | There are primary risk factors related to each of our specific online businesses; |
|
| · | If we are unable to attract new customers and retain customers on a cost-effective basis, our business and results of operations will be affected adversely; |
|
| · | If we fail to develop our brands cost-effectively, our business may be adversely affected; |
|
| · | The market in which our websites participate is competitive and, if we do not compete effectively, our operating results could be harmed; |
|
| · | As part of our business plan, we will continue to acquire or make investments in other companies, or through business relationships, which will divert our management’s attention, result in dilution to our stockholders, consume resources that may be necessary to sustain our business and could otherwise disrupt our operations and adversely affect our operating results; |
|
| · | Pursuant to our long-term investment strategy, we may pursue future acquisitions or business relationships, or make business dispositions that may not be in the best interest of common stockholders in near term or at all; |
|
| · | Because of our limited resources and the significant competition for acquisition opportunities, it may be more difficult for us to acquire target websites that meet our acquisition criteria; |
|
| · | Subsequent to the acquisition of any target business, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and the price of our securities; |
|
| · | We may seek target websites in industries or sectors that may be outside of our management’s areas of expertise; |
|
| · | We will likely not obtain an opinion from an independent accounting or investment banking firm in connection with the acquisition of a target business; |
|
| · | Our resources could be wasted by acquisition transactions that are not completed; |
|
| · | The officers and directors of a target business may resign upon completion of our acquisition. The loss of a target business’ key personnel could negatively impact the operations and profitability of the target business post-acquisition; |
|
| · | We may attempt to simultaneously acquire multiple target online businesses, which may give rise to increased costs and risks that could negatively impact our operations and profitability; |
|
| · | We intend to pursue and acquire target businesses located outside of the United States so we will be subject to a variety of additional risks that may adversely affect us; |
|
| · | We are reliant upon information technology to operate our business and maintain our competitiveness; |
|
| · | Any significant disruption in service on our website or in our computer systems, or in our customer support services, could reduce the attractiveness of our services and result in a loss of customers; |
|
| · | We do not have a disaster recovery system, which could lead to service interruptions and result in a loss of customers; |
|
| · | If a third party asserts that we are infringing its intellectual property, whether successful or not, it could subject us to costly and time-consuming litigation or require us to obtain expensive licenses, and our business may be adversely affected; |
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| Table of Contents |
|
| · | If the security of our customers’ confidential information stored in our systems is breached or otherwise subjected to unauthorized access, our reputation may be severely harmed, we may be exposed to liability and we may lose the ability to offer our customers a credit card payment option; |
|
| · | We may be the subject of intentional cyber disruptions and attacks; |
|
| · | We may not be able to adequately protect our proprietary technology, and our competitors may be able to offer similar products and services which would harm our competitive position; |
|
| · | We could be harmed by improper disclosure or loss of sensitive or confidential data; |
|
| · | Unauthorized breaches or failures in cybersecurity measures adopted by us and/or included in our products and services could have a material adverse effect on our business; |
|
| · | Any actual or perceived failure to comply with new or existing data privacy, data protection, and cybersecurity laws, regulations and other requirements could cause substantial harm to our business; |
|
| · | Online applications are subject to various laws and regulations relating to children’s privacy and protection, which if violated, could subject us to an increased risk of litigation and regulatory actions; |
|
| · | The market for our securities could be considered “thinly-traded,” and an active market in securities may never fully develop; |
|
| · | The price of our securities may fluctuate substantially; |
|
| · | Our Company’s series A preferred stock is senior in rank to shares of our common stock with respect to dividends, liquidation and dissolution; |
|
| · | We may not be able to maintain a listing of our common stock and publicly-traded warrants on Nasdaq; |
|
| · | We have broad discretion in the use of the net proceeds from any exercise of the publicly-traded warrants and we may not use them effectively; |
|
| · | If research analysts do not publish research about our business or if they issue unfavorable commentary or downgrade our common stock or publicly-traded warrants, our securities’ price and trading volume could decline; |
|
| · | We may issue additional equity securities, or engage in other transactions that could dilute our book value or relative rights of our common stock and series A preferred stock, which may adversely affect the market price of our securities; |
|
| · | An investment in our warrants is speculative in nature and could result in a loss of your investment therein; |
|
| · | The warrant certificate governing our warrants designates the state and federal courts of the State of New York sitting in the City of New York, Borough of Manhattan, as the exclusive forum for actions and proceedings with respect to all matters arising out of the warrants, which could limit a warrantholder’s ability to choose the judicial forum for disputes arising out of the warrants; |
|
| · | Market and economic conditions may negatively impact our business, financial condition and share price; |
|
| · | The ability of a stockholder to recover all or any portion of such stockholder’s investment in the event of a dissolution or termination may be limited; |
|
| · | We do not anticipate paying any cash dividends on our common stock in the foreseeable future and, as such, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future; |
|
| · | We are an “emerging growth company” and are able to avail ourselves of reduced disclosure requirements applicable to emerging growth companies, which could make our common stock less attractive to investors; |
|
| · | Financial reporting obligations of being a public company in the United States are expensive and time-consuming, and our management is required to devote substantial time to compliance matters; |
|
| · | If we fail to comply with the rules under Sarbanes-Oxley related to accounting controls and procedures in the future, or, if we discover material weaknesses and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult; |
|
| · | The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures, and internal control over financial reporting and we have identified weaknesses in our internal controls, and we cannot provide assurances that these weaknesses will be effectively remediated or that additional material weaknesses will not occur in the future; |
|
| · | Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plan and outstanding warrants could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall; |
|
| · | Potential comprehensive tax reform bills could adversely affect our business and financial condition.; |
|
| · | We can issue “blank check” preferred stock without stockholder approval with the effect of diluting interests of then-current stockholders and impairing their voting rights, and provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable; |
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| Table of Contents |
|
| · | Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval; |
|
| · | Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt; |
|
| · | Liability of directors for breach of duty is limited under Delaware law; |
|
| · | Provisions in our certificate of incorporation and bylaws may have the effect of discouraging lawsuits against our directors and officers; |
|
| · | If our securities become subject to the penny stock rules, it would become more difficult to trade our shares; |
|
| · | FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock; |
|
| · | We are a smaller reporting company and are exempt from certain disclosure requirements, which could make our common stock less attractive to potential investors; |
|
| · | Changes in accounting principles and guidance, or their interpretation, could result in unfavorable accounting charges or effects, including changes to our previously filed financial statements, which could cause our stock price to decline. |
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| Table of Contents |
THE OFFERING
| Securities offered by us: |
| 6,199,863 shares of common stock issuable upon the exercise of warrants including 6,117,250 shares of common stock issuable upon exercise of the publicly-traded warrants and 82,613 shares of common stock issuable upon the exercise of the representative’s warrants. |
|
|
|
|
| Shares of common stock outstanding before this offering:(1) |
| 5,127,395 shares of common stock. |
|
|
|
|
| Common stock outstanding after the offering assuming full exercise of the publicly-traded warrants and the representative’s warrants(1): |
| 11,327,258 shares of common stock. |
|
|
|
|
| Use of proceeds: |
| The publicly-traded warrants and the representative’s warrants are each exercisable immediately and will remain exercisable at any time up to August 30, 2027. The publicly-traded warrants are exercisable at a per share exercise price of $5.00. The representative’s warrants are exercisable at a per share exercise price of $5.50. Warrants may be exercised only for a whole number of shares. Assuming the exercise of all warrants for cash at the warrants’ current exercise price, we will receive proceeds of approximately $31,040,622. We plan to use the proceeds from this offering for acquisitions of websites, technologies, or other assets (as of the date of this prospectus, we have no agreements to make any acquisitions), working capital and other corporate purposes. See section entitled “Use of Proceeds” for a more complete description of the intended use of proceeds from this offering. |
|
|
|
|
| Dividend policy: |
| Our Company has never declared any cash dividends on its common stock. We currently intend to use all available funds and any future earnings for use in financing the growth of our business and to meet our series A preferred stock dividend obligations. We do not anticipate paying any cash dividends on our common stock for the foreseeable future. See “Dividend Policy,” “Risk Factors – Risks Related to Owning Our Securities” and “Description of Securities - Series A Preferred Stock” in this prospectus for more information regarding our dividend policy. |
|
|
|
|
| Trading symbol: |
| Our common stock and publicly-traded warrants are listed on the Nasdaq Capital Market under the symbols “ONFO” and “ONFOW”, respectively. |
|
|
|
|
| Risk factors: |
| You should carefully consider the information set forth in this prospectus and the specific factors set forth in the “Risk Factors” section beginning on page 14 of this prospectus before deciding whether or not to invest in the units. |
|
| (1) | The number of shares of common stock outstanding before and immediately following this offering does not include the following: | |
|
|
| · | 781,860 total shares of common stock issuable upon the exercise of options with a weighted exercise price of $0.96, which we have granted to our employees, officers and directors under our 2020 Equity Incentive Plan, and |
|
|
| · | 2,600,000 shares of common stock that are reserved for issuance under the Plan, which is inclusive of the 781,860 shares issuable upon the exercise of options referred to above that were issued under the Plan. |
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| Table of Contents |
The following summary financial and operating data set forth below should be read in conjunction with our Company’s financial statements, the notes thereto and the other information contained in this prospectus. The summary statement of operations data for the years ended December 31, 2024 and 2023 have been derived from our Company’s audited financial statements appearing elsewhere in this prospectus. The summary statement of operations data for the three and six months ended June 30, 2025 and 2024 have been derived from our Company’s unaudited financial statements appearing elsewhere in this prospectus. The historical results presented below are not necessarily indicative of financial results to be achieved in future periods. The financial statements have been prepared and presented in accordance with generally accepted accounting principles in the United States. You should read this data together with the information under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our historical results are not necessarily indicative of our future results or any other period. The summary financial data included in this section are not intended to replace the financial statements and the related notes included elsewhere in this prospectus.
|
|
| For the Six Months Ended June 30, |
|
| For the Years Ended December 31, |
| ||||||||||
| Statement of operations data: |
| 2025 |
|
| 2024 |
|
| 2024 |
|
| 2023 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Revenue |
| $ | 5,960,152 |
|
| $ | 3,313,501 |
|
| $ | 7,862,077 |
|
| $ | 5,239,986 |
|
| Gross Profit |
|
| 3,645,397 |
|
|
| 1,979,767 |
|
|
| 4,544,877 |
|
|
| 3,242,831 |
|
| Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative |
|
| 4,288,142 |
|
|
| 2,536,839 |
|
|
| 5,718,243 |
|
|
| 5,981,601 |
|
| Professional fees |
|
| 583,646 |
|
|
| 401,445 |
|
|
| 948,751 |
|
|
| 1,160,410 |
|
| Acquisition costs |
|
| 65,673 |
|
|
| 103,287 |
|
|
| 264,731 |
|
|
| 326,899 |
|
| Impairement of goodwill and intangible assets |
|
| - |
|
|
| - |
|
|
| 121,000 |
|
|
| 5,016,765 |
|
| Total Operating Expenses |
|
| 4,937,461 |
|
|
| 3,041,571 |
|
|
| 7,052,725 |
|
|
| 12,485,675 |
|
| Income (Loss) From Operations |
|
| (1,292,064 | ) |
|
| (1,061,804 | ) |
|
| (2,507,848 | ) |
|
| (9,242,844 | ) |
| Other income (expense) |
|
| (66,193 | ) |
|
| (45,065 | ) |
|
| 733,906 |
|
|
| 92,778 |
|
| Income tax provision |
|
| 17,390 |
|
|
| - |
|
|
| - |
|
|
| - |
|
| Net loss |
|
| (1,340,867 | ) |
|
| (1,106,869 | ) |
|
| (1,773,942 | ) |
|
| (9,150,066 | ) |
| Net income (loss) attributable to noncontrolling interest |
|
| (23,124 | ) |
|
| 1,918 |
|
|
| 7,737 |
|
|
| - |
|
| Net loss attributable to Onfolio Holdings Inc. |
|
| (1,363,991 | ) |
|
| (1,104,951 | ) |
|
| (1,766,205 | ) |
|
| (9,150,066 | ) |
| Preferred dividends |
|
| (199,851 | ) |
|
| (166,113 | ) |
|
| (354,228 | ) |
|
| (227,298 | ) |
| Net Income (Loss) per common shareholder |
| $ | (1,563,842 | ) |
| $ | (1,271,064 | ) |
| $ | (2,120,433 | ) |
| $ | (9,377,364 | ) |
| Net loss per common stock, basic and diluted |
| $ | (0.30 | ) |
| $ | (0.25 | ) |
| $ | (0.41 | ) |
| $ | (1.84 | ) |
| Weighted average common stocks outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unaudited pro forma net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pro-forma net loss to common shareholders |
| $ | (1,563,842 | ) |
| $ | (1,271,064 | ) |
| $ | (2,120,433 | ) |
| $ | (9,377,364 | ) |
| Pro forma net loss per share, basic and diluted |
| $ | (0.14 | ) |
| $ | (0.11 | ) |
| $ | (0.19 | ) |
| $ | (0.83 | ) |
| Shares used to calculate pro forma net loss per common stock, basic and diluted |
|
| 11,327,258 |
|
|
| 11,310,058 |
|
|
| 11,317,804 |
|
|
| 11,307,258 |
|
| Balance sheet data: |
| As of June 30, 2025 |
|
| As of December 31, 2024 |
| ||
| Cash |
| $ | 1,278,656 |
|
| $ | 476,874 |
|
| Total assets |
| $ | 8,831,744 |
|
| $ | 9,592,697 |
|
| Total liabilities |
| $ | 4,341,465 |
|
| $ | 5,243,003 |
|
| Accumulated deficit |
| $ | (20,642,129 | ) |
| $ | (19,078,287 | ) |
| Total Stockholders’ Equity |
| $ | 4,490,279 |
|
| $ | 4,349,694 |
|
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| Table of Contents |
Investing in our securities involves a high degree of risk. Prospective investors should carefully consider the risks described below, together with all of the other information included or referred to in this prospectus, before purchasing our securities. There are numerous and varied risks that may prevent our Company from achieving its goals. If any of these risks actually occur, our Company’s business, financial condition or results of operations may be materially adversely affected. In such case, the trading price of our common stock and publicly-traded warrants could decline and investors could lose all or part of their investment.
Risks Related to Our Business – General
We are a company with limited history and may not be able to continue to successfully manage our online businesses on a combined basis.
We were incorporated on July 20, 2020, and have conducted operations since May 2019. Our failure to continue to develop and maintain effective systems and procedures, including accounting and financial reporting systems, or to manage our operations as a consolidated public company, may negatively impact our ability to optimize the performance of our Company, which could adversely affect our business, financial condition and operating results. In that case, our financial statements might not be indicative of our business, financial condition and operating results.
Many of our websites have a limited operating history upon which investors can evaluate their future prospects.
Both our Company and many of our online businesses have a limited operating history upon which an evaluation of our online businesses and plans or performance and prospects can be made. Our business and prospects must be considered in the light of the potential problems, delays, uncertainties and complications encountered in connection with newly established businesses. The risks include, but are not limited to, the possibility that we will not be able to build a positive reputation with customers, distinguish ourselves from competitors, scale our business efficiently, maintain and expand our businesses relationships with suppliers and service vendors, respond to evolving industry standards and government regulation that impact our business and our online businesses, particularly in the areas of data collection and consumer privacy, prevent or mitigate failures or breaches of security, continue to expand our business internationally, and hire and retain qualified and motivated employees. For example, during 2023, we closed our Digitallyapproved.com and Prettyneatcreative.com online businesses. We cannot assure you that we can successfully address these challenges and if unsuccessful, our, financial condition and operating results could be materially and adversely affected.
Revision of previously issued consolidated financial statements.
During the year ended December 31, 2024, the Company identified errors in its previously issued consolidated financial statements for the year ended December 31, 2023 related to the impairment of intangible assets and goodwill of certain recently acquired businesses. These errors were a result of the Company revising the estimated cash flows used in its determination of the recoverability of the impaired assets as well as the sequencing of impairment testing thereby resulting in an understatement of impairment expense for the year ended December 31, 2023 and a subsequent overstatement of amortization expense in each of the quarters for the year ended December 31, 2024.
The errors noted above did not result in the 2023 financial statements being materially misstated. However, in order to correctly reflect the errors in the appropriate period, management has revised the 2023 previously issued financial statements in our Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on April 16, 2025. See Note 1 of our accompanying audited financial statements Financial Statements.
| 14 |
| Table of Contents |
We have incurred operating losses since our inception and we may continue to incur substantial operating losses for the foreseeable future.
We were incorporated on July 20, 2020, and have conducted operations since May 2019. We have incurred operating losses and experienced negative cash flow since our inception. We incurred a net loss of $1,773,942 for the year ended December 31, 2024 and 1,340,867 for the six months ended June 30, 2025. We anticipate that we will continue to incur operating losses through at least 2025.
We may not be able to generate sufficient revenue from owning and/or managing our online businesses to achieve profitability. We expect to continue to make significant operating and capital expenditures for acquisitions of online businesses, technologies, or other assets; and for marketing, working capital and general corporate purposes. As a result, we will need to generate significant revenue to achieve profitability. We cannot assure you that we will ever achieve profitability.
Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern.
As described in Note 3 of our audited financial statements contained in our Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on April 16, 2025, our auditors have issued a going concern opinion on our December 31, 2024 financial statements, expressing substantial doubt that we can continue as an ongoing business for the next twelve months after issuance of their report based on our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing, debt financing and/or related party advances, however there is no assurance of additional funding being available. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. If we cannot raise the necessary capital to continue as a viable entity, we could experience a material adverse effect on our business and our stockholders may lose some or all of their investment in us.
We can provide no assurances that any additional sources of financing will be available to us on favorable terms, if at all. Our forecast of the period of time through which our current financial resources will be adequate to support our operations and the costs to support our general and administrative and acquisition activities are forward-looking statements and involve risks and uncertainties.
If we do not succeed in raising additional funds on acceptable terms, we could be forced to delay or curtail potential website acquisitions, forego sales and marketing efforts, and forego potential attractive business opportunities. Unless we secure additional financing, we will be unable to continue to execute on our business plan.
We require additional capital to support our present business plans and our anticipated business growth, and such capital may not be available on acceptable terms, or at all, which would adversely affect our ability to operate.
We will require additional funds to further develop our business plan. Based on our current operating plans, we believe we need to make additional acquisitions of online businesses, technologies, or other assets to generate enough cashflow to carry our overhead costs. We may choose to raise additional capital in order to expedite and propel growth more rapidly. We can give no assurance that we will be successful in raising any additional funds. Additionally, if we are unable to generate sufficient revenues from our sales and operating activities, we may need to raise additional funds, doing so through debt and equity offerings, in order to meet our expected future liquidity and capital requirements, including capital required for operations. Any such financing that we undertake will likely be dilutive to current stockholders.
We intend to continue to make investments to support our business growth, including acquiring additional online businesses. In addition, we may also need additional funds to respond to other business opportunities and challenges, including our ongoing operating expenses, protecting our intellectual property, satisfying debt and series A preferred stock payment obligations, and enhancing our operating infrastructure. While we may need to seek additional funding for such purposes, we may not be able to obtain financing on acceptable terms, or at all. In addition, the terms of our financings may be dilutive to, or otherwise adversely affect, holders of our common stock. We may also seek to raise additional funds through arrangements with collaborators or other third parties. We may not be able to negotiate any such arrangements on acceptable terms, if at all. If we are unable to obtain additional funding on a timely basis, we may be required to curtail or terminate some or all our business plans.
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We cannot predict our future capital needs and we may not be able to secure additional financing.
We will need to raise additional funds in the future to fund our working capital needs and to fund further expansion of our business. We may require additional equity or debt financings, collaborative arrangements with corporate partners or funds from other sources for these purposes. No assurance can be given that necessary funds will be available for us to finance our development on acceptable terms, if at all. Furthermore, such additional financings may involve substantial dilution of our stockholders or may require that we relinquish rights to certain of our technologies or products. In addition, we may experience operational difficulties and delays due to working capital restrictions. If adequate funds are not available from operations or additional sources of financing, we may have to delay or scale back our growth plans.
If we fail to retain certain of our key personnel and attract and retain additional qualified personnel, we might not be able to pursue our growth strategy.
Our future success will depend upon the continued services of Dominic Wells, our Chief Executive Officer; Adam Trainor, our Interim Chief Financial Officer and Chief Operations Officer; and other members of our key management team and our consultants. We especially consider Mr. Wells to be critical to the management of our business and operations and the development of our strategic direction. Though no individual is indispensable, the loss of the services of these individuals could have a material adverse effect on our business, operations, revenues or prospects. We do not currently maintain key man life insurance on the lives of these individuals. Our future success will also depend on our ability to identify, hire, develop, motivate and retain highly skilled personnel. Competition in our industry for qualified employees is intense, and our compensation arrangements may not always be successful in attracting new employees and/or retaining and motivating our existing employees. Future acquisitions by us may also cause uncertainty among our current employees and employees of the acquired business, which could lead to the departure of key individuals. Such departures could have an adverse impact on the anticipated benefits of an acquisition.
The need to sustain our current operating structure may place a significant strain on our management and our administrative, operational and financial reporting infrastructure.
Our success will depend in part on the ability of our senior management to effectively manage our current operating structure. To do so, we need to continue to appropriately incentivize, manage and retain our employees, or replace our employees as needed. If our employees perform poorly, or if we are unsuccessful in hiring, training, managing and integrating any new employees, or if we are not successful in retaining our existing employees, our business may be harmed. To manage our operations and personnel, we will need to continue to improve our operational and financial controls and update our reporting procedures and systems. The continued working capital investments that we require will make it more difficult for us to offset any future revenue shortfalls by reducing expenses in the short term. If we fail to successfully manage our current operating infrastructure, we will be unable to continue to execute our business plan. We may also need to hire, train and manage new employees as needed.
Negative publicity could adversely affect our reputation, our business, and our operating results.
Negative publicity about our Company, including, but not limited to the quality and reliability of our online businesses products and services, our privacy and security practices, and litigation could adversely affect our reputation which, in turn, could adversely affect our business, results of operations and financial condition.
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Natural disasters and other events beyond our control could materially adversely affect us.
Natural disasters or other catastrophic events may cause damage or disruption to our operations, international commerce and the global economy, and thus could have a strong negative effect on us. Our business operations are subject to interruption by natural disasters, fire, power shortages, pandemics and other events beyond our control. Such events could make it difficult or impossible for us to deliver our products and services to our customers and could decrease demand for our products and services.
Additionally, we depend on the efficient and uninterrupted operations of our third-party data centers and hardware systems. The data centers and hardware systems are vulnerable to damage from earthquakes, tornados, hurricanes, fire, floods, power loss, telecommunications failures and similar events. If any of these events results in damage to third-party data centers or systems, we may be unable to provide our clients with our products and services until the damage is repaired and may accordingly lose clients and revenues. In addition, subject to applicable insurance coverage, we may incur substantial costs in repairing any damage.
Political and economic factors may negatively affect our financial condition or results of operations.
Some of our online businesses are eCommerce businesses that obtain physical products that are imported from China and Japan. Supply chain interruptions, regulatory changes, catastrophic events or political climate, including the occurrence of war and or other hostilities, could potentially adversely impact our relationships with these vendors. Additionally, tariffs and rising inflation could cause our product, marketing, and labor costs to rise beyond an acceptable level to us or cause us to increase our prices to a level not accepted by consumers. Any of these factors could negatively impact our financial condition or results of operations.
We face risks from artificial intelligence.
We use artificial intelligence technology in certain of our products and services. The use of artificial intelligence in our business presents risks and challenges, including that artificial intelligence algorithms may be flawed, datasets may be insufficient, erroneous, stale, or contain biased information, or the output created by artificial intelligence systems may be discriminatory, offensive, illegal, or otherwise harmful. Artificial intelligence can be based on machine learning that uses inputs that give rise to claims of copyright infringement. These risks, deficiencies and other failures of artificial intelligence systems could subject us to competitive harm, regulatory action, legal liability, and brand or reputational harm.
Our use of artificial intelligence and machine learning technologies could adversely affect our products and services, harm our reputation, or cause us to incur liability resulting from harm to individuals or violation of laws and regulations or contracts to which we are a party.
We use machine learning, and artificial intelligence throughout our business, and are dedicating resources and efforts to continuously improve our use of such technologies. As with many technological innovations, there are significant risks and challenges involved in developing, maintaining and deploying these technologies and there can be no assurance that the usage of such technologies will always enhance our solutions or be beneficial to our business, including our efficiency or profitability.
In particular, if the models underlying the artificial intelligence, and machine learning technologies that we develop or use are: (i) incorrectly designed or implemented; (ii) trained or reliant on incomplete, inadequate, inaccurate, biased or otherwise poor quality data, or on data to which we do not have sufficient rights or in relation to which we and/or the providers of such data have not implemented sufficient legal compliance measures (including with respect to the processing and protection of such data); (iii) used without sufficient oversight and governance to ensure their responsible and ethical use; and/or (iv) adversely impacted by unforeseen defects, technical challenges, cybersecurity threats or material performance issues, the performance of our products, services and business, as well as our reputation and the reputations of our customers and business partners, could suffer or we could incur liability resulting from harm to individuals, civil claims or the violation of laws or contracts to which we are a party.
Risks Related to Our Business – Primary Risk Factors Related to Our Specific Online Businesses
Pace Generative LLC
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| · | G.E.O & Digital Marketing Services Industry Growth. The G.E.O (AI SEO) and Digital Marketing Services industry is growing rapidly and is expected to continue growing over the next 5 years. In the event this industry’s growth does not occur as expected, or occurs slower than expected, the popularity of Pace Generative’s services could decrease, which in turn could negatively impact the website’s revenue generation and our Company’s revenue. |
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| · | AI risks. As Pace Generative offers services helping companies improve their AI visibility, there is risk that LLM errors or data leaks cause reputation damage to Pace or to our clients. |
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Eastern Standard
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| · | Economic Downturn Impact. In the event of an economic slowdown or recession, businesses may reduce marketing and branding budgets to cut costs, which could lead to Eastern Standard facing lower client demand, impacting revenue. |
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| · | Advertising Platform Policy Changes. Eastern Standard’s digital marketing services rely on platforms like Google and Meta. If these platforms adjust their algorithms, ad pricing, or restrictions, it could reduce the effectiveness of digital marketing campaigns, increase costs for clients, and make Eastern Standard’s services less competitive. |
Revenuzen.com
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| · | SEO & Digital Marketing Services Industry Growth. The SEO & Digital Marketing Services industry is significant and expected to continue growing over the next 5 years. In the event this industry’s growth does not occur as expected, or occurs slower than expected, the popularity of RevenueZen.com’s services could decrease, which in turn could negatively impact the website’s revenue generation and our Company’s revenue. |
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| · | Improvements in Software and AI. Technology developments may reduce the demand for human-led digital marketing services, reducing the need to engage marketing agencies, which could in turn negatively impact the Company’s revenue. |
DDSRank.com
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| · | Dental Industry Consolidation. The dental industry is experiencing consolidation, with larger dental groups and private equity-backed organizations acquiring independent practices. As more dental practices become part of larger networks, we could see more budget available to spend on SEO and digital marketing services. However, if they instead build in-house marketing teams, there may be a decline in third party services, potentially impacting DDS Rank’s revenue. |
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| · | Local Search Algorithm Changes. DDS Rank relies on local SEO to generate patient leads for its clients. If search engines modify their local ranking algorithms in ways that disadvantage smaller dental practices, DDS Rank’s clients may see reduced visibility, which could negatively affect DDS Rank’s revenue and client retention. |
Mightydeals.com
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| · | Further changes to email privacy laws. A large part of our Mightydeals.com business generation comes from its approximate one million member email list. Recently Apple has made changes to privacy regarding email, in particular open-rates. This has made it more difficult to accurately gauge who is opening our Mightydeals.com emails, but hasn’t changed our ability to message our audience. Should Apple, or any other company, make further changes to email privacy/deliverability, this could negatively impact the website’s ability to message its subscribers, which in turn could negatively impact the website’s revenue generation. |
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| · | Inability to find Vendors to partner with. Our Mightydeals.com business model relies upon partnering with vendors of graphic design products (such as fonts). If Mightydeals.com can’t continue to partner with vendors, it may not have as many deals to run. Without new deals to onboard onto the platform, it cannot generate revenue from selling deals. |
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Vital-Reaction.com
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| · | FDA Headwinds. The Food and Drug Administration (“FDA”) is the predominant driver of legislation around molecular hydrogen. Currently, as more and more research is published and peer-reviewed, the FDA is allowing more products to enter the market. However, should the FDA adversely change its attitude towards molecular hydrogen, this could impact Vital-Reaction.com’s ability to sell hydrogen products in the US. |
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| · | Email and Facebook Advertising Changes. As with Mightydeals.com, Vital-Reaction.com generates a large portion of its revenue through email and Facebook marketing efforts. As privacy rules change, enforced by Apple in particular, its ability to generate web traffic, and therefore customers, can be negatively impacted. |
Allthingsdogs.com
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| · | Google Traffic Changes. Currently a significant portion of web traffic to Allthingsdogs.com is derived from its high rankings in Google search. Google regularly makes changes to its ranking algorithm, and any one change could negatively impact the website’s rankings and lead to a loss of traffic, which in turn could negatively impact the website’s revenue generation. |
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| · | Display Advertising. The Allthingsdogs.com website currently generates 99% of its income from display advertising. If the display advertising revenue model should experience a significant decline, then Allthingsdogs.com’s revenue would significantly decline. |
SEOButler.com
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| · | SEO Services Industry Growth. The SEO Services industry is significant and expected to continue growing over the next 5 years. In the event this industry’s growth does not occur as expected, or occurs slower than expected the popularity of SEOButler.com’s services could decrease, which in turn could negatively impact the website’s revenue generation and our Company’s revenue. |
ProofreadAnywhere.com/WorkAtHomeSchool.com/WorkYourWay2020.com
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| · | Improvements in Software and AI. Technology developments may improve the quality of automated proofreading, which may lead to reduced career opportunities for proofreaders and lower demand for proofreading education. |
Contentellect.com
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| · | SEO Services Industry Growth. The SEO Services industry is significant and expected to continue growing over the next 5 years. In the event this industry’s growth does not occur as expected, or occurs slower than expected the popularity of Contentellect.com’s services could decrease, which in turn could negatively impact the website’s revenue generation and our Company’s revenue. |
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| · | Improvements in Software and AI. Technology developments may reduce the demand for human written content and negatively impact the Company’s revenue. |
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Fishkeepingworld.com
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| · | Google Traffic Changes. Currently a significant portion of web traffic to Fishkeepingworld.com is derived from its high rankings in Google search. Google regularly makes changes to its ranking algorithm, and any one change could negatively impact the website’s rankings and lead to a loss of traffic, which in turn could negatively impact the website’s revenue generation. |
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| · | Email Marketing Changes. As with our other online businesses, the changes to email marketing and iOS privacy rules could impact FishKeepingWorld.com’s email marketing efforts, which accounts for around 5% of the overall revenue. |
Asubtlerevelry.com
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| · | Google Traffic Changes. Currently a significant portion of web traffic to Asubtlerevelry.com is derived from its high rankings in Google search. Google regularly makes changes to its ranking algorithm, and any one change could negatively impact the website’s rankings and lead to a loss of traffic, which in turn could negatively impact the website’s revenue generation. |
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| · | Display Advertising. The Asubtlerevelry.com website currently generates 99% of its income from display advertising. If the display advertising revenue model should experience a significant decline, then Asubtlerevelry.com’s revenue would significantly decline. |
Wowfreestuff.co.uk
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| · | Search Engine Traffic Changes. Currently a significant portion of web traffic to Wowfreestuff.co.uk is driven by rankings in the UK search engines for terms related to freebies. UK search engines regularly make changes to their ranking algorithms, and any one change could negatively impact the website’s rankings and lead to a loss of traffic, which in turn could negatively impact the website’s revenue generation. |
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| · | Freebie Offerings. If companies no longer utilize freebies or giveaways as part of their marketing strategy, Wowfreestuff.co.uk will have fewer products to promote on its website, which in turn could negatively impact the website’s commission revenue generation. |
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| · | Email Marketing. The vast majority of Wowfreestuff.co.uk’s revenue is generated by emailing its subscribers on a daily basis letting them know about new deals. Any third-party company changes to their email privacy/deliverability rules could negatively impact the website’s ability to email its audience, which in turn could negatively impact the website’s revenue generation. |
Woofwhiskers.com
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| · | Google Traffic Changes. Currently a significant portion of web traffic to Woofwhiskers.com is derived from its high rankings in Google search. Google regularly makes changes to its ranking algorithm, and any one change could negatively impact the website’s rankings and lead to a loss of traffic, which in turn could negatively impact the website’s revenue generation. |
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| · | Pet Food Brands. Visitors to the Woofwhiskers.com website are predominantly driven by the website’s reviews of dog food brands. In the event certain brands are no longer offered or fewer new brands come to market, the website could experience a loss of traffic, which in turn could negatively impact the website’s revenue generation. |
Perfectdogbreeds.com
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| · | Google Traffic Changes. Currently a significant portion of web traffic to Perfectdogbreeds.com is derived from its high rankings in Google search. Google regularly makes changes to its ranking algorithm, and any one change could negatively impact the website’s rankings and lead to a loss of traffic, which in turn could negatively impact the website’s revenue generation. |
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| · | Display Advertising. The Perfectdogbreeds.com website currently generates 99% of its income from display advertising. If the display advertising revenue model should experience a significant decline, then the website’s revenue would significantly decline. |
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DealPipe.io
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| · | Entrepreneurship Through Acquisition Popularity. If the popularity of acquisition entrepreneurship declines, the popularity of Dealpipe’s services could decline, causing the revenue of the Company to fall. |
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| · | Lack of suitable targets. If economic factors lead to a decline in acquirable businesses, this could impact the Company’s ability to serve clients, negatively impacting revenue. |
Craftwhack.com – Managed Property
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| · | Google Traffic Changes. Currently a significant portion of web traffic to Craftwhack.com is derived from its high rankings in Google search. Google regularly makes changes to its ranking algorithm, and any one change could negatively impact the website’s rankings and lead to a loss of traffic, which in turn could negatively impact the website’s revenue generation our Company’s revenue. |
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| · | Popularity of Crafting. A large part of the growth of Craftwhack.com has come from the growth in home and DIY and crafting activities, accelerated by the previous Covid-19 pandemic. The loss of popularity of these activities could negatively impact the website’s revenue generation our Company’s revenue. |
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| · | Dissatisfaction With Our services. Our Company manages the Craftwhack.com website pursuant to a fee-based contract where we earn a profit share. In the event the owner of the website becomes dissatisfied with our management services or no longer considers the cost of our management services fee to have sufficient value, the website could terminate our management contract, which would negatively impact our Company’s revenue. |
Backgroundhawk.com – Managed Property
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| · | Loss of momentum. Backgroundhawk.com is in growth mode and it continues to grow at a steady pace. In the event the website’s growth momentum stalls, the revenues we expect from this website could fail to materialize. |
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| · | Google Traffic Changes. Currently a significant portion of Backgroundhawk.com is derived from its high rankings in Google search. Google regularly makes changes to its ranking algorithm, and any one change could negatively impact the website’s rankings and lead to a loss of traffic, which in turn could negatively impact the website’s revenue generation and our Company’s revenue. |
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| · | Dissatisfaction With Our services. Our Company manages the Backgroundhawk.com website pursuant to a fee-based contract where we earn a profit share. In the event the owner of the website becomes dissatisfied with our management services or no longer considers the cost of our management services fee to have sufficient value, the website could terminate our management contract, which would negatively impact our Company’s revenue. |
Outreachmama.com – Managed Property
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| · | SEO Services Industry Growth. The SEO Services industry is significant and expected to continue growing over the next 5 years. In the event this industry’s growth does not occur as expected, or occurs slower than expected the popularity of Outreachmama.com’s services could decrease, which in turn could negatively impact the website’s revenue generation and our Company’s revenue. |
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| · | Dissatisfaction With Our services. Our Company manages the Outreachmama.com website pursuant to a fee-based contract where we earn fixed revenue and profit share. In the event the owner of the website becomes dissatisfied with our management services or no longer considers the cost of our management services fee to have sufficient value, the website could terminate our management contract, which would negatively impact our Company’s revenue. |
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Getmerankings.com – Managed Property
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| · | SEO Services Industry Growth. The SEO Services industry is significant and expected to continue growing over the next 5 years. In the event this industry’s growth does not occur as expected or occurs slower than expected the popularity of Getmerankings.com’s services could decrease, which in turn could negatively impact the website’s revenue generation and our Company’s revenue. |
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| · | Dissatisfaction With Our services. Our Company manages the Getmerankings.com website pursuant to a fee-based contract where we earn fixed revenue and profit share. In the event the owner of the website becomes dissatisfied with our management services or no longer considers the cost of our management services fee to have sufficient value, the website could terminate our management contract, which would negatively impact our Company’s revenue. |
Risks Related to Our Business – Operating Our Online Businesses
If we are unable to attract new customers and retain customers on a cost-effective basis, our business and results of operations will be affected adversely.
To succeed, we must attract and retain customers on a cost-effective basis. We rely on a variety of methods to attract new customers, such as paying providers of online services, search engines, directories and other online businesses to provide content, advertising banners and other links that direct customers to our website, direct sales and partner sales. If we are unable to use any of our current marketing initiatives or the cost of such initiatives were to significantly increase or such initiatives or our efforts to satisfy our existing customers are not successful, we may not be able to attract new customers or retain customers on a cost-effective basis and, as a result, our revenue and results of operations would be affected adversely.
Additionally, factors outside of our control, such new terms, conditions, policies, or other changes made by the online services, search engines, directories and other online businesses that we rely upon to attract new customers could cause our online businesses to experience short- or long-term business disruptions, which could adversely affect our revenue and results of operations.
If we fail to develop our brands cost-effectively, our business may be adversely affected.
Successful promotion of our Company’s brands will depend largely on the effectiveness of our marketing efforts and on our ability to provide reliable and useful products and services at competitive prices. Brand promotion activities may not yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incur in building our brands. If we fail to successfully promote and maintain our brands or incur substantial expenses in an unsuccessful attempt to promote and maintain our brands, we may fail to attract enough new customers or retain existing customers to the extent necessary to realize a sufficient return on our brand-building efforts, and our business and results of operations could suffer.
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The market in which our online businesses participate is competitive and, if we do not compete effectively, our operating results could be harmed.
The market for our online businesses’ goods and services is competitive and rapidly changing, and the barriers to entry are relatively low. With the influx of new entrants to the market, we expect competition to persist and intensify in the future, which could harm our ability to increase sales, limit customer attrition and maintain our prices. Competition could result in reduced sales, reduced margins or the failure of our products and services to achieve or maintain more widespread market acceptance, any of which could harm our business. We compete with large established online businesses possessing large, existing customer bases, substantial financial resources and established distribution channels, as well as smaller less established online businesses. If either of these types of competitors decide to develop, market or resell competitive services, acquire one of our existing competitors or form a strategic alliance with one of our competitors, our ability to compete effectively could be significantly compromised and our operating results could be harmed. Our current and potential competitors may have significantly more financial, technical, marketing and other resources than we do and may be able to devote greater resources to the development, promotion, sale and support of their products and services. Our current and potential competitors have more extensive customer bases and broader customer relationships than we have. If we are unable to compete with such companies, the demand for our products could substantially decline.
Risks Related to Our Business – Our Acquisition Plans
As part of our business plan, we will continue to acquire or make investments in other companies, or through business relationships, which will divert our management’s attention, result in dilution to our stockholders, consume resources that may be necessary to sustain our business and could otherwise disrupt our operations and adversely affect our operating results.
As part of our business plan, we will continue to acquire or invest in online businesses, applications and services or technologies that we believe could offer growth opportunities or complement or expand our business or otherwise. The pursuit of target online businesses will divert the attention of management and cause us to incur various expenses in identifying, investigating and pursuing suitable acquisitions, whether or not they are consummated.
As we acquire additional online businesses, we may not be able to integrate the acquired personnel, operations and technologies successfully, or effectively manage the combined business following the acquisition. We also may not achieve the anticipated benefits from the acquired business or investments in other companies, due to a number of factors, including:
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| · | inability to integrate or benefit from acquired technologies or services in a profitable manner; |
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| · | unanticipated costs or liabilities associated with the acquisition; |
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| · | difficulty integrating the accounting systems, operations and personnel of the acquired business; |
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| · | difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business; |
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| · | difficulty converting the customers of the acquired business onto our platform and contract terms, including disparities in the revenue, licensing, support or professional services model of the acquired company; |
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| · | diversion of management’s attention from other business concerns; |
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| · | adverse effects to our existing business relationships with business partners and customers as a result of the acquisition; |
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| · | the potential loss of key employees; |
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| · | use of resources that are needed in other parts of our business; and |
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| · | use of substantial portions of our available cash to consummate the acquisition. |
In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets, which must be assessed for impairment at least annually. If future acquisitions do not yield expected returns, we may be required to take charges to our operating results based on this impairment assessment process and this could adversely affect our results of operations.
Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our operating results. In addition, if an acquired business fails to meet our expectations, our operating results, business and financial position may suffer. As of the date of this prospectus, we have no agreements to make any additional acquisitions.
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Pursuant to our long-term investment strategy, we may pursue future acquisitions or business relationships, or make business dispositions that may not be in the best interest of common stockholders in near term or at all.
As part of long-term investment strategy, we will continue to acquire or invest in online businesses, applications and services or technologies that we believe could complement or expand our services or otherwise offer growth opportunities in the long run. We may incur indebtedness for future acquisitions, which would be senior to our shares. Future acquisitions may also reduce our cash available for distribution to our stockholders, including holders of our common shares and series A preferred stock, following such acquisitions. To the extent such acquisitions do not perform as expected, such risk may be particularly heightened. As of the date of this prospectus, we have no agreements to make any additional acquisitions.
In addition to acquiring online businesses, we may sell those online businesses that we own from time to time when attractive opportunities arise that outweigh the future growth and value that we believe we will be able to bring to such online businesses consistent with our long-term investment strategy. As such, our decision to sell a business will be based on our belief that doing so will increase stockholder value to a greater extent than through our continued ownership of that business. Future dispositions of online businesses may reduce our cash flows from operations. We cannot assure you that we will use the proceeds from any future dispositions in a manner with which you agree. You will generally not be entitled to vote with respect to our future acquisitions or dispositions, and we may pursue future acquisitions or dispositions with which you do not agree.
Because of our limited resources and the significant competition for acquisition opportunities, it may be more difficult for us to acquire target online businesses that meet our acquisition criteria.
We expect to encounter competition from other companies having a business plan similar to ours, including private investors (which may be individuals or investment partnerships), blank check companies and other entities, domestic and international, competing for the types of online businesses we intend to acquire. Many of these individuals and entities are well- established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess similar or greater technical, human and other resources to ours or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target online businesses we could potentially acquire, our ability to compete with respect to the acquisition of certain target online businesses that are attractive to us will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain online businesses. As of the date of this prospectus, we have no agreements to make any additional acquisitions.
Subsequent to the acquisition of any target business, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and the price of our securities.
Even if we conduct extensive due diligence on a target website that we acquire, we cannot assure you that this diligence will identify all material issues that may be present with a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets or incur impairment or other charges that could result in our reporting losses. For example, during the year ended December 31, 2023, after taking into account the lower than expected performances of the following businesses and the rising interest rates, the Company recognized impairment losses of $2,642,649 related to the BCP Media Acquisition, $580,284 related to the BWPS Acquisition, and $903,897 related to the SEO Butler Acquisition, $700,000 related to Mighty Deals website domains and $84,000 related to Pretty Neat Creative, operating under Onfolio Crafts LLC, and $105,937 related to various website domains operating under Onfolio Assets LLC for total aggregate impairment expense $5,016,765. Management has a process to evaluate the viability and profitability of each business. If and when management concludes that a business has a significantly reduced future value, management will assess the asset for possible impairment in the quarter management reaches that conclusion. The Company did not incur similar impairment costs during the year ended December 31, 2024. So, even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing to partially finance the acquisition transaction or thereafter. Accordingly, we could experience a significant negative effect on our financial condition, results of operations and the price of our securities. As of the date of this prospectus, we have no agreements to make any additional acquisitions.
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We may seek target online businesses in industries or sectors that may be outside of our management’s areas of expertise.
We will consider a target business outside of our management’s areas of expertise if a target business is presented to us and we determine that such business offers an attractive acquisition opportunity for our Company. Although our management will endeavor to evaluate the risks inherent in any particular acquisition candidate, we cannot assure you that we will adequately ascertain or assess all of the significant risk factors. As of the date of this prospectus, we have no agreements to make any additional acquisitions.
We will likely not obtain an opinion from an independent accounting or investment banking firm in connection with the acquisition of a target business.
We will likely not obtain an opinion from an independent accounting firm or independent investment banking firm that the price we are paying for a target business is fair to our stockholders. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors (“Board”), who will determine fair market value based on standards generally accepted by the financial community.
Our resources could be wasted by acquisition transactions that are not completed.
The investigation of each target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require management time and attention and costs for accountants, attorneys and others. If we decide not to complete a specific acquisition transaction, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our acquisition transaction for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred. As of the date of this prospectus, we have no agreements to make any additional acquisitions.
The officers and directors of a target business may resign upon completion of our acquisition. The loss of a target business’ key personnel could negatively impact the operations and profitability of the target business post-acquisition.
The role of a target business’ key personnel upon the completion of our acquisition transaction cannot be ascertained at this time. Although we contemplate that certain members of a target business’ management team will remain associated with the target business following our acquisition transaction, it is possible that members of the management of a target business will not remain in place. The loss of a target business’ key personnel could negatively impact the operations and profitability of the target business post-acquisition. As of the date of this prospectus, we have no agreements to make any additional acquisitions.
We may attempt to simultaneously acquire multiple target online businesses, which may give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously acquire several online businesses that are owned by different sellers, we will face risks including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired online businesses into our Company. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations. As of the date of this prospectus, we have no agreements to make any additional acquisitions.
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We intend to pursue and acquire target businesses located outside of the United States so we will be subject to a variety of additional risks that may adversely affect us.
We do not plan to acquire any entity with its principal business operations in China (including Hong Kong) but may acquire target online businesses with operations or opportunities outside of the United States, we may face additional burdens in connection with investigating, agreeing to and completing such acquisition transactions, and we would be subject to a variety of additional risks that may negatively impact our operations. If we pursue target online businesses with operations or opportunities outside of the United States, we would be subject to risks associated with cross-border acquisition transactions, including in connection with investigating, agreeing to and completing our acquisition transaction, conducting due diligence in a foreign jurisdiction, having such transactions approved by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates. If we acquire such a business, we would be subject to any special considerations or risks associated with companies operating in an international setting, including any of the following:
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| · | costs and difficulties inherent in managing cross-border business operations; |
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| · | rules and regulations regarding currency redemption; |
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| · | complex corporate withholding taxes on individuals; |
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| · | laws governing the manner in which future partnering transactions may be effected; |
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| · | tariffs and trade barriers; |
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| · | regulations related to customs and import/export matters; |
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| · | local or regional economic policies and market conditions; |
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| · | unexpected changes in regulatory requirements; |
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| · | challenges in managing and staffing international operations; |
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| · | longer payment cycles; |
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| · | tax issues, such as tax law changes and variations in tax laws as compared to the United States; |
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| · | currency fluctuations and exchange controls; |
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| · | rates of inflation; |
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| · | challenges in collecting accounts receivable; |
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| · | cultural and language differences; |
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| · | employment regulations; |
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| · | underdeveloped or unpredictable legal or regulatory systems; |
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| · | corruption; |
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| · | protection of intellectual property; |
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| · | social unrest, crime, strikes, riots and civil disturbances; |
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| · | regime changes and political upheaval; |
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| · | terrorist attacks and wars; and |
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| · | deterioration of political relations with the United States. |
We may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete the acquisition transaction, or, if we complete the acquisition transaction, our operations might suffer, either of which may adversely impact our business, financial condition and results of operations.
Risks Related to Information Technology Systems, Intellectual Property and Privacy Laws
We are reliant upon information technology to operate our business and maintain our competitiveness.
Our ability to leverage our technology and data scale is critical to our long-term strategy. Our business increasingly depends upon the use of sophisticated information technologies and systems, including technology and systems (cloud solutions, mobile and otherwise) utilized for communications, marketing, productivity tools, training, lead generation, records of transactions, business records (employment, accounting, tax, etc.), procurement and administrative systems. The operation of these technologies and systems is dependent upon third-party technologies, systems and services, for which there are no assurances of continued or uninterrupted availability and support by the applicable third-party vendors on commercially reasonable terms. We also cannot assure that we will be able to continue to effectively operate and maintain our information technologies and systems. In addition, our information technologies and systems are expected to require refinements and enhancements on an ongoing basis, and we expect that advanced new technologies and systems will continue to be introduced. We may not be able to obtain such new technologies and systems, or to replace or introduce new technologies and systems as quickly as our competitors or in a cost-effective manner. Also, we may not achieve the benefits anticipated or required from any new technology or system, and we may not be able to devote financial resources to new technologies and systems in the future.
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Any significant disruption in service on our website or in our computer systems, or in our customer support services, could reduce the attractiveness of our services and result in a loss of customers.
The satisfactory performance, reliability and availability of our services are critical to our operations, level of customer service, reputation and ability to attract new customers and retain customers. Most of our computing hardware is co-located in third-party hosting facilities. None of the companies who host our systems guarantee that our customers’ access to our products will be uninterrupted, error-free or secure. Our operations depend on their ability to protect their and our systems in their facilities against damage or interruption from natural disasters, power or telecommunications failures, air quality, temperature, humidity and other environmental concerns, computer viruses or other attempts to harm our systems, criminal acts and similar events. If our arrangements with third-party data centers are terminated, or there is a lapse of service or damage to their facilities, we could experience interruptions in our service as well as delays and additional expense in arranging new facilities. Any interruptions or delays in access to our services, whether as a result of a third-party error, our own error, natural disasters or security breaches, whether accidental or willful, could harm our relationships with customers and our reputation. These factors could damage our brand and reputation, divert our employees’ attention, reduce our revenue, subject us to liability and cause customers to cancel their accounts, any of which could adversely affect our business, financial condition and results of operations.
We do not have a disaster recovery system, which could lead to service interruptions and result in a loss of customers.
Although we have all of our websites and other data backed up with multiple services, we do not have any disaster recovery systems. In the event of a disaster in which our software or hardware are irreparably damaged or destroyed, we would experience interruptions in access to our services. Any or all these events could cause our customers to lose access to our services.
If a third party asserts that we are infringing its intellectual property, whether successful or not, it could subject us to costly and time-consuming litigation or require us to obtain expensive licenses, and our business may be adversely affected.
The online industry is characterized by the existence of a large number of patents, trademarks and copyrights and by frequent litigation based on allegations of infringement or other violations of intellectual property rights. Third parties may assert patent and other intellectual property infringement claims against us in the form of lawsuits, letters or other forms of communication. These claims, whether or not successful, could:
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| · | divert management’s attention; |
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| · | result in costly and time-consuming litigation; |
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| · | require us to enter into royalty or licensing agreements, which may not be available on acceptable terms, or at all; |
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| · | in the case of any open-source software related claims, require us to release our software code under the terms of an open-source license; or |
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| · | require us to redesign our software and services to avoid infringement. |
As a result, any third-party intellectual property claims against us could increase our expenses and adversely affect our business. Even if we have not infringed any third parties’ intellectual property rights, we cannot be sure our legal defenses will be successful, and even if we are successful in defending against such claims, our legal defense could require significant financial resources and management time. Finally, if a third party successfully asserts a claim that our products infringe its proprietary rights, royalty or licensing agreements might not be available on terms we find acceptable or at all and we may be required to pay significant monetary damages to such third party.
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If the security of our customers’ confidential information stored in our systems is breached or otherwise subjected to unauthorized access, our reputation may be severely harmed, we may be exposed to liability and we may lose the ability to offer our customers a credit card payment option.
Our system stores our customers’ proprietary email distribution lists, credit card information and other critical data. Any accidental or willful security breaches or other unauthorized access could expose us to liability for the loss of such information, adverse regulatory action by federal and state governments, time-consuming and expensive litigation and other possible liabilities as well as negative publicity, which could severely damage our reputation. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in our software are exposed and exploited, and, as a result, a third party obtains unauthorized access to any of our customers’ data, our relationships with our customers will be severely damaged, and we could incur significant liability. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until they are launched against a target, we and our third-party hosting facilities may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, many states have enacted laws requiring companies to notify individuals of data security breaches involving their personal data. These mandatory disclosures regarding a security breach often lead to widespread negative publicity, which may cause our customers to lose confidence in the effectiveness of our data security measures. Any security breach, whether actual or perceived, would harm our reputation, and we could lose customers and fail to acquire new customers.
If we fail to maintain our compliance with the data protection policy documentation standards adopted by the major credit card issuers, we could lose our ability to offer our customers a credit card payment option. Any loss of our ability to offer our customers a credit card payment option would make our products less attractive to many small organizations by negatively impacting our customer experience and significantly increasing our administrative costs related to customer payment processing.
We may be the subject of intentional cyber disruptions and attacks.
We expect to be an ongoing target of attacks specifically designed to impede the performance of our products and services. Experienced computer programmers, or hackers, may attempt to penetrate our network security or the security of our data centers and IT environments. These hackers, or others, which may include our employees or vendors, may cause interruptions of our services. Although we continually seek to improve our countermeasures to prevent and detect such incidents, if these efforts are not successful, our business operations, and those of our customers, could be adversely affected, losses or theft of data could occur, our reputation and future sales could be harmed, governmental regulatory action or litigation could be commenced against us and our business, financial condition, operating results and cash flow could be materially adversely affected.
We may not be able to adequately protect our proprietary technology, and our competitors may be able to offer similar products and services which would harm our competitive position.
Our success, in part, depends upon our proprietary technology. We have various forms of intellectual property including copyright, trademark, confidentiality procedures and contractual provisions to establish and protect our proprietary rights. Despite these precautions, third parties could copy or otherwise obtain and use our technology without authorization, or develop similar technology independently. We also pursue the registration of our domain names, trademarks, and service marks in the United States. If we file patent applications, we cannot assure you that any of the patent applications that we file will ultimately result in an issued patent or, if issued, that they will provide sufficient protections for our technology against competitors. We cannot assure you that the protection of our proprietary rights will be adequate or that our competitors will not independently develop similar technology, duplicate our products and services or design around any intellectual property rights we hold.
We could be harmed by improper disclosure or loss of sensitive or confidential data.
Our business operations require us to process and transmit data. Unauthorized disclosure or loss of sensitive or confidential data may occur through a variety of methods. These include, but are not limited to, systems failure, employee negligence, fraud or misappropriation, or unauthorized access to or through our information systems, whether by our employees or third parties, including a cyberattack by computer programmers, hackers, members of organized crime and/or state-sponsored organizations, who may develop and deploy viruses, worms or other malicious software programs.
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Such disclosure, loss or breach could harm our reputation and subject us to government sanctions and liability under laws and regulations that protect sensitive or personal data and confidential information, resulting in increased costs or loss of revenues. It is possible that security controls over sensitive or confidential data and other practices we and our third-party vendors follow may not prevent the improper access to, disclosure of, or loss of such information. The potential risk of security breaches and cyberattacks may increase as we acquire additional business and introduce new services and offerings. Further, data privacy is subject to frequently changing rules and regulations, which sometimes conflict among the various jurisdictions in which our online businesses operate. Any failure or perceived failure to successfully manage the collection, use, disclosure, or security of personal information or other privacy related matters, or any failure to comply with changing regulatory requirements in this area, could result in legal liability or impairment to our reputation in the marketplace.
Unauthorized breaches or failures in cybersecurity measures adopted by us and/or included in our products and services could have a material adverse effect on our business.
Information security risks have generally increased in recent years, in part because of the proliferation of new technologies and the use of the Internet, and the increased sophistication and activity of organized crime, hackers, terrorists, activists, cybercriminals and other external parties, some of which may be linked to terrorist organizations or hostile foreign governments. Cybersecurity attacks are becoming more sophisticated and include malicious attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data, substantially damaging our reputation. Our security systems are designed to maintain the security of our users’ confidential information, as well as our own proprietary information. Accidental or willful security breaches or other unauthorized access by third parties or our employees, our information systems or the systems of our third-party providers, or the existence of computer viruses or malware in our or their data or software could expose us to risks of information loss and misappropriation of proprietary and confidential information, including information relating to our products or customers and the personal information of our employees.
In addition, we could become subject to unauthorized network intrusions and malware on our own IT networks. Any theft or misuse of confidential, personal or proprietary information as a result of such activities or failure to prevent security breaches could result in, among other things, unfavorable publicity, damage to our reputation, loss of our trade secrets and other competitive information, difficulty in marketing our products, allegations by our customers that we have not performed our contractual obligations, litigation by affected parties and possible financial obligations for liabilities and damages related to the theft or misuse of such information, as well as fines and other sanctions resulting from any related breaches of data privacy regulations, any of which could have a material adverse effect on our reputation, business, profitability and financial condition. Furthermore, the techniques used to obtain unauthorized access or to sabotage systems change frequently and are often not recognized until launched against a target, and we may be unable to anticipate these techniques or to implement adequate preventative measures.
Any actual or perceived failure to comply with new or existing data privacy, data protection, and cybersecurity laws, regulations and other requirements could cause substantial harm to our business.
We are subject to U.S. federal, state, local and international laws, regulations, industry standards and contractual obligations regarding data privacy, data protection and cybersecurity, including those governing the processing and protection of personal, sensitive and other proprietary or confidential information.
In the United States, there are numerous federal and state data privacy and security laws, rules, and regulations governing the processing of personal data, including federal and state data privacy laws, data breach notification laws, and consumer protection laws. For example, the U.S. Federal Trade Commission (the “FTC”) and many state attorneys general are interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination, and security of data. Such standards require us to publish statements that describe how we handle personal data and choices individuals may have about the way we handle their personal data. If such information that we publish is considered untrue or inaccurate, we may be subject to government claims of unfair or deceptive trade practices, which could lead to significant liabilities and consequences. Moreover, according to the FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal data secure may constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act. State consumer protection laws provide similar causes of action for unfair or deceptive practices. All 50 U.S. states, the District of Columbia and several U.S. territories have adopted data breach notification laws that require notice to be given to affected individuals, regulators, credit reporting agencies and/or others when certain types of data have been compromised as the result of a cybersecurity breach or incident. In the event of such a cybersecurity incident, our compliance with these laws may subject us to costs associated with investigation, notice and remediation, as well as potential litigation and investigations from applicable regulatory authorities. We may also become liable for damages under our contracts and applicable law and incur penalties and other costs. Depending on the facts and circumstances, any damages, penalties, fines and costs could be significant.
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For example, California enacted the California Consumer Privacy Act (the “CCPA”), which gives California residents expanded rights to access and delete their personal information, opt out of certain sales of personal information, and receive detailed information about what personal information is collected, how their personal information is used, and how that personal information is shared. The CCPA provides for civil penalties for violations enforced by the California Attorney General, as well as a private right of action for data breaches that is expected to increase data breach litigation. Additionally, the California Privacy Rights Act (the “CPRA”) expands upon the CCPA and imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data and opt outs for certain uses and disclosure of sensitive personal information. It also created a new California data protection agency authorized to issue substantive regulations, which is likely to result in increased privacy, cybersecurity and data protection enforcement. The CCPA has encouraged “copycat” laws in other states across the country. For example, Colorado enacted the Colorado Privacy Act (the “CPA”). Similar laws have been proposed (and in some states, passed), and likely will continue to be proposed, in other states and at the federal level which have conflicting requirements that make compliance challenging. We cannot yet determine the full impact that these laws, regulations and standards may have on our business or operations, but it may increase our compliance costs and potential liability, particularly in the event of a data breach, as we grow, and the associated compliance costs may have a material adverse effect on our business.
In addition to the United States, a growing number of other global jurisdictions are considering or have passed legislation implementing data protection requirements that currently or may in the future apply to us and that could increase the cost and complexity of delivering our services, particularly as we expand our operations internationally. For example, in the EU and UK, we are subject to the EU General Data Protection Regulation (“EU GDPR”), the UK General Data Protection Regulation and the UK Data Protection Act (together, the “UK GDPR”) (the EU GDPR and UK GDPR together, the “GDPR”). The GDPR imposes stringent data protection requirements for processing the personal data of individuals within the EU and UK, many of which are different from requirements under existing U.S. privacy laws. The GDPR enhances data protection obligations for “processors” and “controllers” of personal data, including, for example, expanded disclosure requirements, limitations on retention of personal data, mandatory data breach notification requirements and additional obligations. Non-compliance with the GDPR can trigger fines of up to the greater of €20 million/£17.5 million, or 4%, of our global annual turnover, and since we are under the supervision of relevant data protection authorities in both the EU and the UK, we may be fined under both the EU GDPR and the UK GDPR for the same breach. Non-compliance with the GDPR may also place restrictions on the conduct of our business and the manner in which we interact with our customers. Among other requirements, the GDPR generally prohibits transfers of personal data subject to the GDPR outside of the EU/UK, including the United States, unless a lawful data transfer solution has been implemented or a data transfer derogation applies. Recent legal developments in Europe have created complexity and uncertainty regarding transfers of personal data from the EU and UK to third countries, including the United States. As the landscape further develops, we could suffer additional costs, complaints and/or regulatory investigations or fines, and we may have to take additional or different compliance measures, stop using certain tools and vendors and make other operational changes.
We are also subject to evolving EU/UK privacy laws, which impose strict requirements on the use of cookies (and similar tracking technologies) and communications data including, for example, a requirement to collect valid consent for cookies and similar technologies, a prohibition on pre-checked consents and a requirement to ensure separate consents are sought for each type of non-essential cookie. European court and regulatory decisions are driving increased attention to cookies and tracking technologies, and data protection regulators are increasingly active in enforcement in this area. If enforcement by regulators of the strict approach to opt-in consent for all but essential use cases, as seen in recent guidance and decisions continues, this could lead to substantial costs, require significant systems changes, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, increase costs and subject us to additional liabilities.
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Additionally, as we accept debit and credit cards for payment, we are subject to the Payment Card Industry Data Security Standard (“PCI-DSS”), issued by the Payment Card Industry Security Standards Council. PCI-DSS contains compliance guidelines with regard to our security surrounding the physical and electronic storage, processing and transmission of cardholder data. If we or our service providers are unable to comply with the security standards established by banks and the payment card industry, we may be subject to fines, restrictions and expulsion from card acceptance programs, which could materially and adversely affect our business.
Further, we may be impacted by evolving EU cybersecurity laws. The Network and Information Security 2 Directive (“NIS 2”) came into force in January 2023, building on the original Network and Information Security Directive, amending the rules on security of network and information systems in the EU. EU Member States were required to adopt NIS 2 into national law by October 17, 2024. NIS2 broadens the scope of regulated sectors and entities, including the space sector, and imposes heightened cybersecurity obligations on in-scope entities, including in respect of supply chain security, and reporting requirements in respect of incidents having a significant impact on the provision of their services and significant cyber threats. It also introduces more stringent supervisory measures and stricter enforcement requirements – EU Member States must provide for administrative fines of at least the greater of €10 million, or up to 2% of annual worldwide turnover for certain infringements of NIS 2. Once fully in force, national laws implementing NIS 2 may require us to modify our cybersecurity practices and policies and we could incur substantial costs as a result.
Many federal, state and foreign government bodies and agencies have introduced additional laws and regulations governing the use of artificial intelligence and machine learning technologies. It is also possible that new laws and regulations will be adopted in the United States and in other countries, or that existing laws and regulations will be interpreted in ways that would affect the way in which we use artificial intelligence. It may not be possible to predict how such changes in the legal and regulatory landscape may affect our development or use of artificial intelligence. For example, the EU has introduced a new regulation applicable to certain artificial intelligence technologies and the data used to train, test and deploy them (the “EU AI Act”). The EU AI Act entered into force on August 1, 2024, and its requirements will become effective on a staggered basis, with the majority of the substantive requirements applying from August 2, 2026. The EU AI Act will impose material requirements on both the providers and deployers of artificial intelligence technologies, and prohibit certain artificial intelligence practices, with infringement punishable by sanctions of up to 7% of annual worldwide turnover or EUR 35 million (whichever is higher) for the most serious breaches. Once fully applicable, the EU AI Act will have a material impact on the way artificial intelligence is regulated in the EU, and together with developing guidance and/or decisions in this area, may affect our use of artificial intelligence and our ability to provide and to improve our services, require additional compliance measures and changes to our operations and processes, result in increased compliance costs and potential increases in civil claims against us, and could adversely affect our business, operations and financial condition. In addition, in the United States, the Trump administration has rescinded an executive order relating to the safe, secure and trustworthy development of artificial intelligence technologies that was previously issued by the Biden administration. The Trump administration then issued a new executive order on January 23, 2025 that, among other things, requires certain agencies to develop and submit to the president action plans to “sustain and enhance America’s global AI dominance in order to promote human flourishing, economic competitiveness, and national security,” to review all policies, directives, regulations, orders and other actions taken pursuant to the rescinded Biden executive order and to, as appropriate and consistent with applicable law, suspend, revise, or rescind any such policies, directives, regulations, orders and other actions that are or may be inconsistent with, or present obstacles to, the policy of sustaining and enhancing America’s global AI dominance. Thus, the Trump administration or other agencies or governmental bodies may continue to rescind other existing federal orders, directive, regulations, actions and/or policies relating to artificial intelligence, or may issue, adopt or implement new executive orders and/or other policies, directives, regulations, orders and other actions relating to artificial intelligence in the future. Any such changes at the federal level could require us to expend significant resources to modify our products, services, or operations to ensure compliance or remain competitive.
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Although we seek to comply with applicable laws, regulations, industry standards and other legal obligations relating to data privacy, data protection and cybersecurity, these requirements are continuously evolving and may be modified, interpreted, or applied in an inconsistent manner from one jurisdiction to another and may conflict with one another or other legal obligations with which we must comply, which raises both costs of compliance and likelihood that we will fail to satisfy all of our legal requirements. Moreover, many of the laws and regulations in this area are relatively new and their interpretations are uncertain and subject to change. Monitoring, preparing for and complying with the array of data privacy, data protection and cybersecurity legal regimes to which we are subject also requires us to devote significant resources, including, financial and time-related resources. Each of these data privacy, data protection and cybersecurity laws, regulations and standards and any other such changes or new laws, regulations or standards could impose significant limitations on our ability to process data and to offer certain types of products or services, require increased compliance costs and/or changes to our business, which may make our business costlier or less efficient to conduct.
In addition, any failure or perceived failure by us to comply with any data privacy, data protection or cybersecurity laws, regulations, standards or contractual obligations to which we are or may become subject, or other legal obligations relating to data privacy, data protection, cybersecurity or consumer protection could adversely affect our reputation, brands and business, and may result in investigations, claims, proceedings or actions against us by governmental entities, customers, suppliers or others, including class actions, or other liabilities or may require us to change our operations and/or cease using certain data sets. Any such investigations, claims, proceedings, actions, or other liabilities could hurt our reputation, brands and business, force us to incur significant expenses in investigations and defense of such proceedings or actions, distract our management, increase our costs of doing business, result in a loss of customers and third-party partners and result in the imposition of significant damages liabilities or monetary penalties.
In addition, we depend on several third-party vendors in relation to the operation of our business, a number of which process personal information on our behalf. With each such provider, we attempt to mitigate the associated risks of using third parties by performing security assessments and due diligence and entering into contractual arrangements designed to ensure that providers only process personal information according to our instructions, and that they have technical and organizational security measures in place. There is no assurance that these contractual measures and our own privacy and security-related safeguards will protect us from the risks associated with the third-party processing of such information. Any violation of data privacy, data protection or cybersecurity laws, regulations, standards, or contractual obligations by our third-party processors could have a material adverse effect on our business, financial condition and operating results, and result in the fines and penalties outlined above.
Online applications are subject to various laws and regulations relating to children’s privacy and protection, which if violated, could subject us to an increased risk of litigation and regulatory actions.
A variety of laws and regulations have been adopted in recent years aimed at protecting children using the internet such as the COPPA and Article 8 of the GDPR. We implement certain precautions to ensure that we do not knowingly collect personal information from children under the age of 13 through our websites. Despite our efforts, no assurances can be given that such measures will be sufficient to completely avoid allegations of COPPA violations, any of which could expose us to significant liability, penalties, reputational harm and loss of revenue, among other things. Additionally, new regulations are being considered in various jurisdictions to require the monitoring of user content or the verification of users’ identities and age. Such new regulations, or changes to existing regulations, could increase the cost of our operations.
Risks Related to Owning Our Securities
The market for our securities could be considered “thinly-traded,” and an active market in securities may never fully develop.
Our common stock and publicly-traded warrants were listed and began trading on the Nasdaq Capital Market on August 26, 2022, under the symbols “ONFO” and “ONFOW,” respectively. Our series A preferred stock became quoted and began trading on the OTCQB on October 30, 2024 under the symbol “ONFOP.” Prior to these listings or quotations, there was no public market for these securities. Despite certain increases of trading volume from time to time, there have been periods when the market for our securities could be considered “thinly-traded,” meaning that the number of persons interested in purchasing our securities at or near bid prices at any given time may be relatively small. Any event or events that could cause current investors to sell our securities could place downward pressure on the trading price of our securities and the trading price of our securities could decline, meaning that you may experience a decrease in the value of your common stock and publicly-traded warrants regardless of our operating performance or prospects.
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The price of our securities may fluctuate substantially.
You should consider an investment in our securities to be risky, and you should invest in our securities only if you can withstand a significant loss and wide fluctuations in the market value of your investment. Some factors that may cause the market price of our securities to fluctuate, in addition to the other risks mentioned in this “Risk Factors” section and elsewhere in this prospectus, are:
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| · | sale of our common stock by our stockholders, executives, and directors; | |
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| · | volatility and limitations in trading volumes of our shares of securities; | |
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| · | our ability to obtain financing; | |
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| · | the timing and success of introductions of new products by us or our competitors or any other change in the competitive dynamics of our business’ industries; | |
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| · | our ability to attract new customers; | |
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| · | changes in our capital structure or dividend policy, future issuances of securities, sales of large blocks of securities by our stockholders; | |
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| · | our cash position; | |
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| · | announcements and events surrounding financing efforts, including debt and equity securities; | |
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| · | our inability to enter into new markets or develop new products; | |
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| · | reputational issues; | |
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| · | announcements of acquisitions, partnerships, collaborations, joint ventures, new products, capital commitments, or other events by us or our competitors; | |
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| · | changes in general economic, political and market conditions in or any of the regions in which we conduct our business; | |
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| · | changes in industry conditions or perceptions; | |
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| · | analyst research reports, recommendation and changes in recommendations, price targets, and withdrawals of coverage; | |
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| · | departures and additions of key personnel; | |
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| · | disputes and litigations related to intellectual properties, proprietary rights, and contractual obligations; | |
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| · | changes in applicable laws, rules, regulations, or accounting practices and other dynamics; and | |
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| · | other events or factors, many of which may be out of our control. | |
In addition, if the market for securities in our industry or industries related to our industry, or the stock market in general, experiences a loss of investor confidence, the trading price of our securities could decline for reasons unrelated to our business, financial condition and results of operations. If any of the foregoing occurs, it could cause our stock price to fall and may expose us to lawsuits that, even if unsuccessful, could be costly to defend and a distraction to management.
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Our Company’s series A preferred stock is senior in rank to shares of our common stock with respect to dividends, liquidation and dissolution.
We have 1,000,000 shares of series A preferred stock reserved pursuant to an ongoing concurrent private offering of series A preferred stock. As of the date of this Report on prospectus, 170,460 shares of series A preferred stock are issued and outstanding. The series A preferred is senior in rank to shares of common stock with respect to dividends, liquidation and dissolution. Each share of series A preferred carries an annual 12% cumulative, non-compounding dividend based on the cash amount invested into the series A preferred, payable quarterly. All accrued dividends on any shares of series A preferred stock shall be paid in cash only when, as and if declared by the Board out of funds legally available therefor or upon a liquidation or redemption of the shares of series A preferred stock in accordance with the liquidation and redemption provisions of the shares of series A preferred stock contained in the Company’s certificate of incorporation. Dividends on series A preferred will be paid prior to any dividends on any other class of shares, including common stock. In the event of any liquidation, dissolution or winding up of our Company, the proceeds shall be paid as follows: (i) first, pay the purchase price plus accrued dividends, on each share of series A preferred; and (ii) next, the balance of any proceeds shall be distributed pro rata to holders of common stock or other junior securities. Except as otherwise required by law, the series A preferred stock have no voting rights other than as provided by the provisions of our Company’s certificate of incorporation where the series A preferred will vote as a separate class. The series A preferred shall be redeemable at the option of our Company commencing any time after January 1, 2026 at a price equal to the purchase price ($25.00 per share as of the date hereof) plus accrued dividends, on each share of series A preferred. On or before 180 days following the sale of at least 600,000 shares of the series A preferred, our Company shall register the series A preferred by preparing and filing one registration statement, or if necessary more than one registration statement, of our Company in compliance with the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and thereafter apply to list the series A preferred stock on a U.S. stock exchange or develop a public trading market for the series A preferred stock by soliciting securities brokers to become market makers of the series A preferred on an established over the counter trading market, such as the OTC Markets. Our series A preferred stock became quoted and began trading on the OTCQB on October 30, 2024 under the symbol “ONFOP.”
We may not be able to maintain a listing of our common stock and publicly-traded warrants on Nasdaq.
Although our common stock and publicly-traded warrants are listed on Nasdaq, we must meet certain financial and liquidity criteria to maintain such listing. If we violate Nasdaq’s listing requirements, or if we fail to meet any of Nasdaq’s listing standards, our common stock and publicly-traded warrants may be delisted. In addition, our board of directors may determine that the cost of maintaining our listing on a national securities exchange outweighs the benefits of such listing. A delisting of our common stock and publicly-traded warrants from Nasdaq may materially impair our shareholders’ ability to buy and sell our common stock and publicly-traded warrants and could have an adverse effect on the market price of, and the efficiency of the trading market for, our common stock and warrants. The delisting of our common stock and publicly-traded warrants could significantly impair our ability to raise capital and the value of your investment.
We have broad discretion in the use of the net proceeds from any exercise of the publicly-traded warrants and we may not use them effectively.
Our management will have broad discretion in the application of the net proceeds from the exercise of the publicly-traded warrants and the representative’s warrants, including for any of the currently intended purposes described in the section entitled “Use of Proceeds.” Because of the number and variability of factors that will determine our use of the net proceeds from any exercise of the publicly-traded warrants, their ultimate use may vary substantially from their currently intended use. Our management may not apply our cash from any exercise of the publicly-traded warrants in ways that ultimately increase the value of any investment our securities or enhance stockholder value. The failure by our management to apply these funds effectively could harm our business. Pending their use, we may invest the net proceeds from any exercise of the publicly-traded warrants in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to our stockholders. If we do not invest or apply our cash in ways that enhance stockholder value, we may fail to achieve expected financial results, which may result in a decline in the price of our shares of common stock, and, therefore, may negatively impact our ability to raise capital, invest in or expand our business, acquire additional products or licenses, commercialize our products, or continue our operations.
If research analysts do not publish research about our business or if they issue unfavorable commentary or downgrade our securities, our securities’ price and trading volume could decline.
The trading market for our securities may depend in part on the research and reports that research analysts publish about us and our business. If we do not maintain adequate research coverage, or if any of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, the price of our securities could decline. If one or more of our research analysts ceases to cover our business or fails to publish reports on us regularly, demand for our securities could decrease, which could cause the price of securities or trading volume to decline.
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We may issue additional equity securities, or engage in other transactions that could dilute our book value or relative rights of our common stock and series A preferred stock, which may adversely affect the market price of our securities.
Our Board may determine from time to time that it needs to raise additional capital by issuing additional shares of our common stock, series A preferred stock or other securities. Except as otherwise described in this prospectus, we will not be restricted from issuing additional common stock, including securities that are convertible into or exchangeable for, or that represent the right to receive, shares of our common stock, or series A preferred stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, or nature of any future offerings, or the prices at which such offerings may be affected. Additional equity offerings may dilute the holdings of existing stockholders or reduce the market price of some of our securities, or all of them. Holders of our securities are not entitled to pre-emptive rights or other protections against dilution. New investors also may have rights, preferences and privileges that are senior to, and that adversely affect, then current holders of our securities. Additionally, if we raise additional capital by making offerings of debt or preferred shares, upon our liquidation, holders of our debt securities and preferred shares, and lenders with respect to other borrowings, may receive distributions of its available assets before the holders of our common stock. We currently have 1,000,000 shares of series A preferred stock reserved pursuant to an ongoing concurrent private offering of series A preferred stock. As of the date of this prospectus, 170,460 shares of series A preferred stock are issued and outstanding. The series A preferred stock is senior in rank to shares of common stock with respect to dividends, liquidation and dissolution, but may not be senior in rank to other series of preferred stock that we may issue in the future.
An investment in our publicly-traded warrants is speculative in nature and could result in a loss of your investment therein.
Our warrants do not confer any rights of common stock ownership on their holders, such as voting rights or the right to receive dividends, but rather merely represent the right to acquire shares of our common stock at a fixed price for a limited period of time. Our warrants are exercisable for five years from the date of initial issuance and currently have an exercise price of $5.00 per share. There can be no assurance that the market price of our shares of common stock will equal or exceed the exercise price of the warrants. In the event that the stock price of our shares of common stock does not exceed the exercise price of the warrants during the period when the warrants are held and exercisable, the warrants may not have any value to their holders.
The warrant certificate governing our publicly-traded warrants designates the state and federal courts of the State of Delaware as the exclusive forum for actions and proceedings with respect to all matters arising out of the publicly-traded warrants, which could limit a warrantholder’s ability to choose the judicial forum for disputes arising out of the publicly-traded warrants.
The warrant certificate governing our warrants provides that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by the warrant certificate (whether brought against a party to the warrant certificate or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the District of Delaware. The warrant certificate further provides that we and the warrant holders irrevocably submit to the exclusive jurisdiction of the state and federal courts sitting in the District of Delaware for the adjudication of any dispute under the warrant certificate or in connection with it or with any transaction contemplated by it or discussed in it, including under the Securities Act. Furthermore, we and the warrant holders irrevocably waive, and agree not to assert in any suit, action or proceeding, any claim that we or they are not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. With respect to any complaint asserting a cause of action arising under the Securities Act or the rules and regulations promulgated thereunder, we note, however, that there is uncertainty as to whether a court would enforce this provision and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
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Notwithstanding the foregoing, these provisions of the warrant certificate will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum.
Any person or entity purchasing or otherwise acquiring or holding or owning (or continuing to hold or own) any interest in any of our warrants shall be deemed to have notice of and consented to the foregoing provisions. Although we believe this exclusive forum provision benefits us by providing increased consistency in the application of the governing law in the types of lawsuits to which it applies, the exclusive forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or any of our directors, officers, other employees, stockholders, or others which may discourage lawsuits with respect to such claims. Our warrant holders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder as a result of this exclusive forum provision. Further, in the event a court finds the exclusive forum provision contained in our warrant certificates to be unenforceable or inapplicable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our results of operations.
Market and economic conditions may negatively impact our business, financial condition and share price.
Concerns over inflation, tariffs, energy costs, geopolitical issues, the U.S. mortgage market and unstable real estate market, unstable global credit markets and financial conditions, and volatile oil prices have led to periods of significant economic instability, diminished liquidity and credit availability, declines in consumer confidence and discretionary spending, diminished expectations for the global economy and expectations of slower global economic growth going forward, increased unemployment rates, and increased credit defaults in recent years. Our general business strategy may be adversely affected by any such economic downturns, volatile business environments and continued unstable or unpredictable economic and market conditions. If these conditions continue to deteriorate or do not improve, it may make any necessary debt or equity financing more difficult to complete, more costly, and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance, and overall plan of business.
The ability of a stockholder to recover all or any portion of such stockholder’s investment in the event of a dissolution or termination may be limited.
In the event of a dissolution or termination of our Company, the proceeds realized from the liquidation of the assets of our Company, or our subsidiaries will be distributed among the common stockholders, but only after the satisfaction of the claims of third-party creditors of our Company and holders of our series A preferred stock. Each share of series A preferred carries an annual 12% cumulative, non-compounding dividend based on the cash amount invested into the series A preferred, payable quarterly. Dividends on series A preferred will be paid prior to any dividends on any other class of shares, including common stock. In the event of any liquidation, dissolution or winding up of our Company, the proceeds shall be paid as follows: (i) first, pay the purchase price plus accrued dividends, on each share of series A preferred; and (ii) next, the balance of any proceeds shall be distributed pro rata to holders of common stock or other junior securities. The ability of a common stockholder to recover all or any portion of such stockholder’s investment under such circumstances will, accordingly, depend on the amount of net proceeds realized from such liquidation and the amount of claims to be satisfied therefrom. There can be no assurance that our Company will recognize gains on such liquidation, nor is there any assurance that common stockholders will receive a distribution in such a case.
We do not anticipate paying any cash dividends on our common stock in the foreseeable future and, as such, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.
We do not anticipate paying any cash dividends on our common stock for the foreseeable future. Our Company has never declared any cash dividends on its common stock. We currently intend to use all available funds and any future earnings for use in financing the growth of our business and to meet our series A preferred stock dividend obligations.
In addition, and any future loan arrangements we enter into may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our common stock. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.
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We are an “emerging growth company” and are able to avail ourselves of reduced disclosure requirements applicable to emerging growth companies, which could make our common stock less attractive to investors.
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we have elected to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, pursuant to Section 107 of the JOBS Act, as an “emerging growth company” we have elected to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. As such, our financial statements may not be comparable to companies that comply with public company effective dates.
We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. We may take advantage of these reporting exemptions until we are no longer an “emerging growth company.” We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our initial public offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
Financial reporting obligations of being a public company in the United States are expensive and time-consuming, and our management is required to devote substantial time to compliance matters.
As a publicly traded company, we incur significant additional legal, accounting and other expenses. The obligations of being a public company in the United States require significant expenditures and place significant demands on our management and other personnel, including costs resulting from public company reporting obligations under the Exchange Act and the rules and regulations regarding corporate governance practices, including those under the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the listing requirements of the Nasdaq Capital Market on which our securities are listed. These rules require the establishment and maintenance of effective disclosure and financial controls and procedures, internal control over financial reporting and changes in corporate governance practices, among many other complex rules that are often difficult to implement, monitor and maintain compliance with. Moreover, despite recent reforms made possible by the JOBS Act, the reporting requirements, rules, and regulations will make some activities more time-consuming and costly, particularly after we are no longer an “emerging growth company.” In addition, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance. Our management and other personnel devote a substantial amount of time to ensure that we comply with all of these requirements and keep pace with new regulations so that we do not fall out of compliance and risk becoming subject to litigation or being delisted, among other potential problems.
If we fail to comply with the rules under Sarbanes-Oxley related to accounting controls and procedures in the future, or, if we discover material weaknesses and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult.
Section 404 of Sarbanes-Oxley requires annual management assessments of the effectiveness of our internal control over financial reporting. If we fail to comply with the rules under Sarbanes-Oxley related to disclosure controls and procedures in the future, or, if we discover material weaknesses and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult. If material weaknesses or significant deficiencies are discovered or if we otherwise fail to achieve and maintain the adequacy of our internal control, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of Sarbanes-Oxley. Moreover, effective internal controls are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock could drop significantly.
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The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures, and internal control over financial reporting and we have identified weaknesses in our internal controls, and we cannot provide assurances that these weaknesses will be effectively remediated or that additional material weaknesses will not occur in the future.
We do not yet have effective disclosure controls and procedures, or internal controls over all aspects of our financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Our management has deemed certain conditions to be material weaknesses and significant deficiencies in our internal controls. For example, we failed to employ a sufficient number of staff to maintain optimal segregation of duties and to provide optimal levels of oversight and we rely upon a third-party accounting firm to assist us with GAAP compliance, the design and maintenance of effective internal controls over the accounting for impairment of goodwill and intangible assets and purchase accounting was ineffective, and the design and maintenance of controls over the accounting for website design and implementation and website management revenues was ineffective. Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. We will be required to expend time and resources to further improve our internal controls over financial reporting, including by expanding our staff. However, we cannot assure you that our internal control over financial reporting, as modified, will enable us to identify or avoid material weaknesses in the future.
Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business, including increased complexity resulting from our international expansion. Further, weaknesses in our disclosure controls or our internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting could also adversely affect the results of management reports and independent registered public accounting firm audits of our internal control over financial reporting that we are required to include in our periodic reports that we file with the SEC. Ineffective disclosure controls and procedures, and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which could have a negative effect on the market price of our common stock.
As a public company, we are required to provide an annual management report on the effectiveness of our internal control over financial reporting. Our independent registered public accounting firm is not required to audit the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company” as defined in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating.
Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our business and operating results, and cause a decline in the market price of our common stock.
Future sales and issuances of our securities or rights to purchase our securities, including pursuant to our equity incentive plan and outstanding warrants could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.
We expect that significant additional capital may be needed in the future to continue our planned operations, including acquiring additional online businesses, marketing activities and costs associated with operating a public company. To raise capital, we may sell common stock, series A preferred stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, series A preferred stock, convertible securities or other equity securities, existing stockholders may be materially diluted by subsequent sales, and new investors could gain rights, preferences and privileges senior to the holders of our existing securities. The aggregate number of shares of our common stock that may be issued pursuant to stock awards under our 2020 Equity Incentive Plan, as amended, (the “2020 Plan”) is 2,600,000 shares, except at any given time, the number of shares that may be issued pursuant to the 2020 Plan cannot exceed the number of shares that is equal to 20% of our Company’s total shares of common stock outstanding at the time of any grant of awards under the 2020 Plan. Increases in the number of shares available for future grant or purchase may result in additional dilution, which could cause our stock price to decline.
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Potential comprehensive tax reform bills could adversely affect our business and financial condition.
The U.S. government may enact comprehensive federal income tax legislation that could include significant changes to the taxation of business entities. These changes include, among others, a permanent increase to the corporate income tax rate. The overall impact of this potential tax reform is uncertain, and our business and financial condition could be adversely affected. This prospectus does not discuss any such tax legislation or the manner in which it might affect purchasers of our common stock. We urge our stockholders to consult with their legal and tax advisors with respect to any such legislation and the potential tax consequences of investing in our common stock.
We can issue “blank check” preferred stock without stockholder approval with the effect of diluting interests of then-current stockholders and impairing their voting rights, and provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable.
Our certificate of incorporation authorizes the issuance of up to 5,000,000 shares of “blank check” preferred stock with designations, rights and preferences as may be determined from time to time by our Board. Of these 5,000,000 shares, 1,000,000 shares have been previously designated as series A preferred. Of the remaining 4,000,000 shares of “blank check” preferred stock, our Board is empowered, without stockholder approval, to issue one or more series of preferred stock with dividend, liquidation, conversion, voting or other rights which could dilute the interest of, or impair the voting power of, our common stockholders. The issuance of a series of preferred stock could be used as a method of discouraging, delaying or preventing a change in control. For example, it would be possible for our Board to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of our Company. In addition, advanced notice is required prior to stockholder proposals, which might further delay a change of control.
Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.
Our directors and executive officers own approximately 30.8% of our outstanding common stock. Accordingly, these stockholders may exert significant influence over the outcome of corporate actions requiring stockholder approval, including the election of directors, a merger, the consolidation or sale of all or substantially all of our assets or any other significant corporate transaction. The interests of these stockholders may not be the same as or may even conflict with our other investors’ interests. For example, these stockholders could delay or prevent a change in control of us, even if such a change in control would benefit our other stockholders, which could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our Company or our assets. The significant concentration of stock ownership may negatively impact the value of our common stock due to potential investors’ perception that conflicts of interest may exist or arise.
Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.
Provisions of our certificate of incorporation and bylaws may delay or discourage transactions involving an actual or potential change in control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price of our common stock. Among other things, subject to the rights of holders of any series of preferred stock, our certificate of incorporation and bylaws:
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| · | empower our Board to fix the number of directors of our Company solely by resolution; |
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| · | do not allow for cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates; |
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| · | empower our Board to fill any vacancy on our Board, whether such vacancy occurs as a result of an increase in the number of directors or otherwise; |
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| · | provide that special meetings of our stockholders may only be called by the Board or the chair of the Board (except that stockholders may also call special meetings of our stockholders so long as such stockholders beneficially owns at least 25% of the voting power of the outstanding shares of our stock); |
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| · | establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our stockholders; |
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| · | provide our Board the ability to authorize undesignated preferred stock. This ability makes it possible for our Board to issue, without stockholder approval, preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us; |
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| · | provide that any director or the entire Board may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least 66 2/3% in voting power of the stock of the Company entitled to vote thereon; |
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| · | provide that our Board is expressly authorized to adopt, amend or repeal our bylaws; and |
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| · | provide that our directors will be elected by a plurality of the votes cast in the election of directors. |
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Additionally, any provision of Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our security holders to receive a premium for their securities and could also affect the price that some investors are willing to pay for our securities.
Liability of directors for breach of duty is limited under Delaware law.
Our certificate of incorporation limits the liability of directors to the maximum extent permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability for any:
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| · | breach of their duty of loyalty to us or our stockholders; |
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| · | act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; |
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| · | unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or |
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| · | transaction from which the directors derived an improper personal benefit. |
These limitations of liability do not apply to liabilities arising under the federal or state securities laws and do not affect the availability of equitable remedies such as injunctive relief or rescission.
Our bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by law, and may indemnify employees and other agents. Our bylaws also provide that we are obligated to advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
At present, there is no pending litigation or proceeding involving any of our directors or officers as to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.
Provisions in our certificate of incorporation and bylaws may have the effect of discouraging lawsuits against our directors and officers.
Our certificate of incorporation and bylaws provide that unless our Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (1) any derivative action or proceeding brought on behalf of the Company; (2) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s stockholders; (3) any action arising pursuant to any provision of the Delaware General Corporation Law (“DGCL”) or our certificate of incorporation or bylaws (as either may be amended from time to time); or (4) any action asserting a claim governed by the internal affairs doctrine.
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Unless our Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of our Company shall be deemed to have notice of and consented to the provisions of our certificate of incorporation.
Further, if any action the subject matter of which is within the scope of the section immediately above is filed in a court other than a court located within the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce section immediately above (an “FSC Enforcement Action”) and (ii) having service of process made upon such stockholder in any such FSC Enforcement Action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.
The above-described provisions of our certificate of incorporation and bylaws that provide for the Court of Chancery of the State of Delaware as the sole and exclusive forum for any actions, claims or proceedings do not apply to suits brought to enforce a duty or liability created by the Exchange Act, Securities Act or any other claim for which the federal courts have exclusive jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in our securities shall be deemed to have notice of and consented to these provisions. Our exclusive forum provision will not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders will not be deemed to have waived our compliance with these laws, rules and regulations.
Together, these charter, statutory and contractual provisions could make the removal of our management and directors more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our common stock. Furthermore, the existence of the foregoing provisions, as well as the significant common stock beneficially owned by our founder, executive officers, members of our Board, and others could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our Company, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.
If our securities become subject to the penny stock rules, it would become more difficult to trade our shares.
The Securities and Exchange Commission, or the SEC, has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. If we do not retain a listing on Nasdaq or another national securities exchange and if the price of our securities is less than $5.00, our securities could be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our securities, and therefore shareholders may have difficulty selling their securities.
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FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock.
In addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority (“FINRA”), has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative, low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. The FINRA requirements may make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity in our common stock. As a result, fewer broker-dealers may be willing to make a market in our common stock, reducing a stockholder’s ability to resell shares, as well as overall liquidity, of our common stock.
We are a smaller reporting company and are exempt from certain disclosure requirements, which could make our common stock less attractive to potential investors.
Rule 12b-2 of the Exchange Act, defines a “smaller reporting company” as an issuer that is not an investment company, an asset-backed issuer, or a majority- owned subsidiary of a parent that is not a smaller reporting company and that:
|
| · | had a public float of less than $250 million as of the last business day of its most recently completed second fiscal quarter, computed by multiplying the aggregate worldwide number of shares of its voting and non-voting common equity held by non-affiliates by the price at which the common equity was last sold, or the average of the bid and asked prices of common equity, in the principal market for the common equity; or |
|
| · | in the case of an initial registration statement under the Securities Act of 1933, as amended, or the Exchange Act for shares of its common equity, had a public float of less than $250 million as of a date within 30 days of the date of the filing of the registration statement, computed by multiplying the aggregate worldwide number of such shares held by non-affiliates before the registration plus, in the case of a Securities Act registration statement, the number of such shares included in the registration statement by the estimated public offering price of the shares; or |
|
| · | in the case of an issuer whose public float was zero, had annual revenues of less than $100 million during the most recently completed fiscal year for which audited financial statements are available. |
As a smaller reporting company, we are not required and may not include a Compensation Discussion and Analysis section in our proxy statements; we provide only two years of financial statements; and we do not need to provide the table of selected financial data. We also have other “scaled” disclosure requirements that are less comprehensive than issuers that are not smaller reporting companies which could make our securities less attractive to potential investors, and also could make it more difficult for our stockholders to sell their securities.
Changes in accounting principles and guidance, or their interpretation, could result in unfavorable accounting charges or effects, including changes to our previously filed financial statements, which could cause our stock price to decline.
We prepare our financial statements in accordance with GAAP. These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate accounting principles and guidance. A change in these principles or guidance, or in their interpretations, may have a significant effect on our reported results and retroactively affect previously reported results.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. Forward-looking statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “we believe,” “we intend,” “may,” “should,” “will,” “could” and similar expressions denoting uncertainty or an action that may, will or is expected to occur in the future. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements. You should not place undue reliance on these forward-looking statements.
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Examples of forward-looking statements include, but are not limited to:
|
| ● | the anticipated timing of the development of future products; |
|
| ● | projections of costs, revenue, earnings, capital structure and other financial items; |
|
| ● | statements of our plans and objectives; |
|
| ● | statements regarding the capabilities of our business operations; |
|
| ● | statements of expected future economic performance; |
|
| ● | statements regarding competition in our market; and |
|
| ● | assumptions underlying statements regarding us or our business. |
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:
|
| ●
| our ability to manage our current and projected financial position and estimated cash burn rate, including our estimates regarding expenses, future revenues and capital requirements, and ultimately our ability to continue as a going concern; |
|
| ●
| our ability to raise additional capital to further develop and expand our business to meet our long-term business objectives. We have limited revenues and we cannot predict when we will achieve significant revenues and sustained profitability; |
|
| ● | our ability to achieve significant revenues and sustained profitability; |
|
| ● | impairment of goodwill and long-lived assets |
|
| ● | changes in customer demand; |
|
| ● | our ability to develop our brands cost-effectively, to attract new customers and retain customers on a cost-effective basis; |
|
| ● | our ability to compete in the markets in which our online businesses participate; |
|
| ● | our ability to make strategic actions, including acquisitions and dispositions and our success in integrating acquired businesses; |
|
| ● | our ability to continue to successfully manage our online businesses on a combined basis; |
|
| ● | security breaches, cybersecurity attacks and other significant disruptions in our information technology systems |
|
| ● | developments and changes in laws and regulations, including increased regulation of our industry through legislative action and revised rules and standards; |
|
| ● | the occurrence of war and or other hostilities, political instability or catastrophic events; |
|
| ● | natural events such as severe weather, fires, floods and earthquakes, or man-made or other disruptions of our operating systems, structures or equipment; |
|
| ● | Risks related to, and the costs associated with, environmental, social and governance (ESG) matters, including the scope and pace of related rulemaking activity; and |
|
| ● | Other factors and risks described under “Risk Factors” herein and in any of the Company’s subsequent reports filed with the SEC and available on its website at www.sec.gov. |
Any forward-looking statement made by us in this prospectus is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
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The shares of common stock offered pursuant to this prospectus are issuable upon the exercise of the publicly-traded warrants and the representative’s warrants. Upon exercise of such warrants for cash, we will receive the applicable cash exercise price paid by the holders of the warrants for gross proceeds of approximately $31,040,622, assuming the exercise of all warrants for cash at the warrants’ current exercise price.
We plan to use such proceeds, if and when we receive any, for acquisitions of websites, technologies, or other assets (as of the date of this prospectus, we have no agreements to make any acquisitions), working capital and other corporate purposes.
We cannot predict when or if the warrants will be exercised. It is possible that the warrants may expire and may never be exercised.
The foregoing represents our current intentions to use and allocate these proceeds based upon our present plans and business conditions. Our management, however, will have broad discretion in the way that we use these proceeds. Pending the final application of the proceeds, we intend to invest the proceeds in short-term, interest-bearing, investment-grade securities.
Investors will pay any broker-dealer discounts and commissions and expenses incurred by them for brokerage, accounting, tax or legal services or any other expenses incurred by them in disposing of shares pursuant to this prospectus. We will bear all other costs, fees and expenses incurred in effecting the registration of the shares covered by this prospectus, including, without limitation, all registration and filing fees and fees and expenses of our counsel and our accountants.
We have never paid or declared any cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to use all available funds and any future earnings for use in financing the growth of our business and to meet our series A preferred stock dividend obligations. Any future determination to pay dividends will be at the discretion of our Board and will depend upon a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors our Board deems relevant.
MARKET PRICE OF COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Market Information
Our common stock and publicly traded warrants are listed on the Nasdaq Capital Market under the symbols “ONFO” and “ONFOW,” respectively.
On August 21, 2025, the closing/last price of our common stock and publicly-traded warrants on the Nasdaq Capital Market was $1.045 and $0.1893, respectively.
Number of Holders of our Common Shares
As of the date of this prospectus, we had approximately 57 holders of our common stock, not including persons who hold our common stock in nominee or "street name” accounts through brokers or banks.
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Securities Authorized for Issuance under Equity Compensation Plans
Equity Compensation Plans as of December 31, 2024.
| Equity Compensation Plan Information | ||||||||||||
|
|
| Number of securities to be issued upon exercise of outstanding options, warrants and rights |
|
| Weighted-average exercise price of outstanding options, warrants and rights |
|
| Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
| |||
| Plan category |
| (a) |
|
| (b) |
|
| (c) |
| |||
| Equity compensation plans approved by security holders(1) |
|
| 412,250 |
|
| $ | 1.02 |
|
|
| 2,167,750 |
|
| Equity compensation plans not approved by security holders(2) |
|
| 82,613 |
|
| $ | 5.50 |
|
|
| 0 |
|
| Total |
|
| 494,863 |
|
| $ | 1.77 |
|
|
| 2,167,750 |
|
| 1. | Reflects shares of common stock to be issued pursuant to our 2020 Equity Incentive for the benefit of our directors, officers, employees and consultants. We have reserved 2,600,000 shares of common stock for such persons pursuant to our 2020 Equity Incentive Plan. |
| 2. | Represents warrants to purchase 82,613 shares of common stock issued to the underwriter in our IPO. The warrants have an exercise price of $5.50, are exercisable beginning on February 22, 2023 and expire on August 25, 2027. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes to the financial statements included elsewhere in this prospectus. This discussion contains forward-looking statements that relate to future events or our future financial performance. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks and other factors include, among others, those listed under “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” and those included elsewhere in this prospectus.
Overview
Onfolio Holdings Inc. acquires controlling interests in and actively manages online businesses that we believe (i) operate in sectors with long-term growth opportunities, (ii) have positive and stable cash flows, (iii) face minimal threats of technological or competitive obsolescence and (iv) can be managed by our existing team or have strong management teams largely in place. Through the acquisition and growth of a diversified group of websites with these characteristics, we believe we offer investors in our shares an opportunity to diversify their own portfolio risk.
Onfolio Holdings Inc. was incorporated on July 20, 2020 under the laws of Delaware to acquire and develop high-growth and profitable websites. Unless the context otherwise requires, all references to "our Company,” "we,” "our” or "us” and other similar terms means Onfolio Holdings Inc., a Delaware corporation, and our wholly- and majority-owned subsidiaries.
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Results of Operations
Three Months Ended June 30, 2025 compared to the Three Months Ended June 30, 2024
The Company reported a net loss of $534,439 for the three months ended June 30, 2025 compared to a net loss of $629,043 for the three months ended June 30, 2024. The components of the decrease in net loss for the current period are as follows:
Revenues
|
|
| For the Quarter Ended June 30, |
|
| $ Change from prior |
|
| % Change from prior |
| |||||||
|
|
| 2025 |
|
| 2024 |
|
| Year |
|
| year |
| ||||
| Revenue, services |
| $ | 2,062,603 |
|
| $ | 993,166 |
|
| $ | 1,069,437 |
|
|
| 108 | % |
| Revenue, product sales |
|
| 1,085,606 |
|
|
| 733,433 |
|
|
| 352,173 |
|
|
| 48 | % |
| Total Revenue |
| $ | 3,148,209 |
|
| $ | 1,726,599 |
|
|
| 1,421,610 |
|
|
| 82 | % |
Revenue increased by $1,421,610, or 82% for the three months ended June 30, 2025 compared to 2024. The increase is primarily due to revenue from our Eastern Standard acquisition completed during the fourth quarter of fiscal 2024, which increased revenue by approximately $1,250,500 and our DDS Rank acquisition completed at the end of the second quarter of fiscal 2024, which increased revenue by approximately $38,800. In addition, our digital product sales increased by approximately $480,000 under our Proofread anywhere subsidiary as a result of an increase in business performance.
Cost of Revenue
|
|
| For the Quarter Ended June 30, |
|
| $ Change from |
|
| % Change from |
| |||||||
|
|
| 2025 |
|
| 2024 |
|
| prior year |
|
| prior year |
| ||||
| Cost of revenue, services |
| $ | 1,074,065 |
|
| $ | 557,518 |
|
| $ | 516,547 |
|
|
| 93 | % |
| Cost of revenue, product sales |
|
| 135,867 |
|
|
| 193,650 |
|
|
| (57,783 | ) |
|
| (30 | )% |
| Total Cost of Revenue |
|
| 1,209,932 |
|
|
| 751,168 |
|
|
| 458,764 |
|
|
| 61 | % |
Cost of revenue increased by $458,764, or 61% due to the Company’s recent acquisitions which increased cost of service revenue, partially offset by a reduction in cost of product sales revenue. This reduction was driven by a strategic shift in the Company’s marketing approach for certain subsidiaries, emphasizing advertising (recorded under operating expenses), and reducing reliance on affiliate sales (recorded under cost of revenue). Lower product sales from the Mighty Deals and Vital Reaction subsidiaries also contributed to the offset. The Company’s gross profit margins decreased slightly in the current period compared to the prior period. The components most significant to the Company’s cost of revenue are the costs of labor for service fulfillment, content creation, website hosting and maintenance costs and the costs of acquiring new inventory products for physical product sales.
Operating Expenses
Selling, General and Administrative
General and Administrative expenses increased by $715,141, or 53% during the three months ended June 30, 2025 compared to 2024. The increase was primarily due to an increase in advertising and marketing costs of $391,000, increase in contractor and compensation costs of $56,000, increase in other general and administrative costs of $93,000, including travel and merchant fees, and an increase in amortization expenses of $176,000 associated with the acquired intangible assets, Eastern Standard and DDS Rank, not present in the comparable period.
Our general and administrative expenses consist primarily of consulting related expenses paid to contractors, stock-based compensation, advertising and marketing costs, and other expenses. In the near future, we expect our general and administrative expenses to continue to increase to support business growth. Over the long term, we expect general and administrative expenses to decrease as a percentage of revenue.
Professional Fees and Acquisition Costs
Professional fees increased by $124,486, or 56% during the three months ended June 30, 2025 compared to 2024 primarily due to increased legal and accounting costs associated with the Company’s compliance requirements as a public company. The Company also incurred $32,263 in acquisition costs during the three months ended June 30, 2025 compared to $8,946 during 2024, which included due diligence, audit, legal and other professional fees related to acquisitions and potential acquisitions. We expect acquisition costs to remain significant as we continue to grow based on acquisitions.
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Other Income and expense
Total other expense was $27,788 during the three months ended June 30, 2025, compared to other expense of $22,618 during 2024. The increase in other expense was driven by an increase in interest expense from increased loan balances.
Business Segment Results of Operations
We operate in two business segments: Business to Business (“B2B”) and Business to Consumers (“B2C”). We organize our business segments based on the nature of products and services offered, and the economic characteristics of each segment. Following is a brief description of the activities of our business segments:
Selected Financial Data by Business Segment
Net sales and operating profit of the Company’s business segments exclude intersegment sales, cost of sales and profit as these activities are eliminated in consolidation and thus are not included in management’s evaluation of performance of each segment. Sales, cost of sales and operating profit for each of our business segments were as follows:
|
|
| For the Three Months ended June 30, |
| |||||
|
|
| 2025 |
|
| 2024 |
| ||
| Revenue |
|
|
|
|
|
| ||
| B2B |
| $ | 1,974,771 |
|
| $ | 915,475 |
|
| B2C |
|
| 1,173,438 |
|
|
| 811,124 |
|
| Total revenue |
| $ | 3,148,209 |
|
| $ | 1,726,599 |
|
|
|
|
|
|
|
|
|
|
|
| Cost of Sales |
|
|
|
|
|
|
|
|
| B2B |
| $ | 1,052,778 |
|
| $ | 550,269 |
|
| B2C |
|
| 157,154 |
|
|
| 200,899 |
|
| Total Cost of Sales |
| $ | 1,209,932 |
|
| $ | 751,168 |
|
|
|
|
|
|
|
|
|
|
|
| Operating income (loss) |
|
|
|
|
|
|
|
|
| B2B |
| $ | 70,173 |
|
| $ | 74,463 |
|
| B2C |
|
| 150,261 |
|
|
| 62,106 |
|
| Total business segment operating income (loss) |
|
| 220,434 |
|
|
| 136,569 |
|
| Unallocated items |
|
| (726,957 | ) |
|
| (742,994 | ) |
| Total consolidated operating income (loss) |
| $ | (506,523 | ) |
| $ | (606,425 | ) |
Management evaluates performance on our contracts by focusing on net sales and operating profit and not by type or amount of operating expense. Consequently, our discussion of business segment performance focuses on net sales and operating profit, consistent with our approach for managing the business. This approach is consistent throughout the life cycle of our contracts, as management assesses the bidding of each contract by focusing on net sales and operating profit and monitors performance on our contracts in a similar manner through their completion.
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| Table of Contents |
B2B
Our B2B segment includes the results of operations of Eastern Standard, RevenueZen, DDS Rank, SEO Butler, Contentellect, and DealPipe. These entities share similar characteristics such as customers being businesses and being primarily service-related revenue.
B2B revenue increased by $1,059,296 or 116% during the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase is primarily due to revenue from our DDS Rank acquisition completed at the end of the second quarter of fiscal 2024, which increased revenue by approximately $38,800, and our Eastern Standard acquisition completed during the fourth quarter of fiscal 2024, which increased revenue by approximately $1,250,500.
B2B total operating income increased by $561,077 or 193% during the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase was a result of the increased revenue and gross profit offset by the increase in intangible asset amortization for the newly acquired businesses in the year ended 2024.
B2C
Our B2C segment includes the results of operations of Proofread Anywhere, Onfolio Assets, Mighty Deals, and Vital Reaction. These entities share characteristics such as the end customers being individual consumers, and sales being more focused on product sales, including digital sales.
B2C revenue increased by $362,314 or 45% during the three months June 30, 2025 compared to the three months ended June 30, 2024. The increase is primarily due to an increase in digital product sales within the Company’s Proofread Anywhere subsidiary.
B2C incurred total operating income of $150,261 during the three months ended June 30, 2025 compared to an operating income of $62,106 during the three months ended June 30, 2024, primarily due to the increase in sales from the Proofread Anywhere subsidiary.
Six Months Ended June 30, 2025 compared to the Six Months Ended June 30, 2024
The Company reported a net loss of $1,340,867 for the six months ended June 30, 2025 compared to a net loss of $1,106,869 for the six months ended June 30, 2024. The components of the increase in net loss for the current period are as follows:
Revenues
|
|
| For the Period Ended June 30, |
|
| $ Change from prior |
|
| % Change from prior |
| |||||||
|
|
| 2025 |
|
| 2024 |
|
| Year |
|
| year |
| ||||
| Revenue, services |
| $ | 3,859,198 |
|
| $ | 1,716,717 |
|
| $ | 2,142,481 |
|
|
| 125 | % |
| Revenue, product sales |
|
| 2,100,954 |
|
|
| 1,596,784 |
|
|
| 504,170 |
|
|
| 32 | % |
| Total Revenue |
| $ | 5,960,152 |
|
| $ | 3,313,501 |
|
|
| 2,646,651 |
|
|
| 80 | % |
Revenue increased by $2,646,651, or 80% for the six months ended June 30, 2025 compared to 2024. The increase is primarily due to revenue from our Eastern Standard acquisition completed during the fourth quarter of fiscal 2024, which increased revenue by approximately $2,168,000 and our DDS Rank acquisition completed at the end of the second quarter of fiscal 2024, which increased revenue by approximately $91,300. In addition, our digital product sales increased by approximately $804,000 under our Proofread anywhere subsidiary as a result of a change in business marketing strategy.
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| Table of Contents |
Cost of Revenue
|
|
| For the Period Ended June 30, |
|
| $ Change from |
|
| % Change from |
| |||||||
|
|
| 2025 |
|
| 2024 |
|
| prior year |
|
| prior year |
| ||||
| Cost of revenue, services |
| $ | 2,086,349 |
|
| $ | 924,224 |
|
| $ | 1,162,125 |
|
|
| 126 | % |
| Cost of revenue, product sales |
|
| 228,406 |
|
|
| 409,510 |
|
|
| (181,104 | ) |
|
| (44 | )% |
| Total Cost of Revenue |
|
| 2,314,755 |
|
|
| 1,333,734 |
|
|
| 981,021 |
|
|
| 74 | % |
Cost of revenue increased by $981,021, or 94% due to the Company’s recent acquisitions which increased cost of service revenue, partially offset by a reduction in cost of product sales revenue. This reduction was driven by a strategic shift in the Company’s marketing approach for certain subsidiaries, emphasizing advertising (recorded under operating expenses), and reducing reliance on affiliate sales (recorded under cost of revenue). Lower product sales from the Mighty Deals and Vital Reaction subsidiaries also contributed to the offset. The Company’s gross profit margins decreased slightly in the current period compared to the prior period. The components most significant to the Company’s cost of revenue are the costs of labor for service fulfillment, content creation, website hosting and maintenance costs and the costs of acquiring new inventory products for physical product sales.
Operating Expenses
Selling, General and Administrative
General and Administrative expenses increased by $1,751,303, or 69% during the six months ended June 30, 2025 compared to 2024. The increase was primarily due to an increase in advertising and marketing costs of $718,000, an increase in stock-based compensation expense of $254,000, increase in contractor and compensation costs of $142,000, increase in other general and administrative costs of $198,000, including travel and merchant fees, and an increase in amortization expenses of $352,000 associated with the acquired intangible assets not present in the comparable period.
Our general and administrative expenses consist primarily of consulting related expenses paid to contractors, stock-based compensation, advertising and marketing costs, and other expenses. In the near future, we expect our general and administrative expenses to continue to increase to support business growth. Over the long term, we expect general and administrative expenses to decrease as a percentage of revenue.
Professional Fees and Acquisition Costs
Professional fees increased by $182,201, or 45% during the six months ended June 30, 2025 compared to 2024 primarily due to increased legal and accounting costs associated with the Company’s compliance requirements as a public company. The Company also incurred $65,673 in acquisition costs during the six months ended June 30, 2025 compared to $103,287 during 2024, which included due diligence, audit, legal and other professional fees related to acquisitions and potential acquisitions. We expect acquisition costs to remain significant as we continue to grow based on acquisitions.
Other Income and expense
Total other expense was $66,193 during the six months ended June 30, 2025, compared to other expense of $45,065 during 2024. The increase in other expense was driven by an increase in interest expense from increased loan balances.
Business Segment Results of Operations
We operate in two business segments: Business to Business (“B2B”) and Business to Consumers (“B2C”). We organize our business segments based on the nature of products and services offered, and the economic characteristics of each segment. Following is a brief description of the activities of our business segments:
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| Table of Contents |
Selected Financial Data by Business Segment
Net sales and operating profit of the Company’s business segments exclude intersegment sales, cost of sales and profit as these activities are eliminated in consolidation and thus are not included in management’s evaluation of performance of each segment. Sales, cost of sales and operating profit for each of our business segments were as follows:
|
|
| For the Six Months ended June, |
| |||||
|
|
| 2025 |
|
| 2024 |
| ||
| Revenue |
|
|
|
|
|
| ||
| B2B |
| $ | 3,668,685 |
|
| $ | 1,593,597 |
|
| B2C |
|
| 2,291,467 |
|
|
| 1,719,904 |
|
| Total revenue |
| $ | 5,960,152 |
|
| $ | 3,313,501 |
|
|
|
|
|
|
|
|
|
|
|
| Cost of Sales |
|
|
|
|
|
|
|
|
| B2B |
| $ | 2,035,130 |
|
| $ | 911,199 |
|
| B2C |
|
| 279,625 |
|
|
| 422,535 |
|
| Total Cost of Sales |
| $ | 2,314,755 |
|
| $ | 1,333,734 |
|
|
|
|
|
|
|
|
|
|
|
| Operating income (loss) |
|
|
|
|
|
|
|
|
| B2B |
| $ | 19,628 |
|
| $ | 201,688 |
|
| B2C |
|
| 378,419 |
|
|
| 215,865 |
|
| Total business segment operating income (loss) |
|
| 398,047 |
|
|
| 417,553 |
|
| Unallocated items |
|
| (1,690,111 | ) |
|
| (1,479,357 | ) |
| Total consolidated operating income (loss) |
| $ | (1,292,064 | ) |
| $ | (1,061,804 | ) |
Management evaluates performance on our contracts by focusing on net sales and operating profit and not by type or amount of operating expense. Consequently, our discussion of business segment performance focuses on net sales and operating profit, consistent with our approach for managing the business. This approach is consistent throughout the life cycle of our contracts, as management assesses the bidding of each contract by focusing on net sales and operating profit and monitors performance on our contracts in a similar manner through their completion.
B2B
Our B2B segment includes the results of operations of Eastern Standard, RevenueZen, DDS Rank, SEO Butler, Contentellect, and DealPipe. These entities share similar characteristics such as customers being businesses and being primarily service-related revenue.
B2B revenue increased by $2,075,088 or 130% during the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase is primarily due to revenue from our DDS Rank acquisition completed at the end of the second quarter of fiscal 2024, which increased revenue by approximately $91,300, and our Eastern Standard acquisition completed during the fourth quarter of fiscal 2024, which increased revenue by approximately $2,168,000.
B2B total operating income decreased by $182,060 or 90% during the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The decrease was a result of the increased revenue and gross profit offset by the increase in intangible asset amortization for the newly acquired businesses in the year ended 2024.
B2C
Our B2C segment includes the results of operations of Proofread Anywhere, Onfolio Assets, Mighty Deals, and Vital Reaction. These entities share characteristics such as the end customers being individual consumers, and sales being more focused on product sales, including digital sales.
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B2C revenue increased by $571,563 or 33% during the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase is primarily due to an increase in digital product sales within the Company’s Proofread Anywhere subsidiary.
B2C incurred total operating income of $378,419 during the six months ended June 30, 2025 compared to an operating income of $215,865 during the six months ended June 30, 2024, primarily due to the increase in sales from the Proofread Anywhere subsidiary.
The Year Ended December 31, 2024 compared to the Year Ended December 31, 2023
The Company reported a net loss of $1,773,942, which includes $1,084,624 in non-cash expenses and a $368,464 non-cash gain, for the year ended December 31, 2024 compared to a net loss of $9,150,066, which includes $6,289,015 in non-cash expenses, for the year ended December 31, 2023. The components of the increase in net loss for the current period are as follows:
Revenues
|
|
| For the Year Ended December 31, |
|
| $ Change from prior |
|
| % Change from prior |
| |||||||
|
|
| 2024 |
|
| 2023 |
|
| year |
|
| year |
| ||||
| Revenue, services |
| $ | 4,660,069 |
|
| $ | 1,496,038 |
|
| $ | 3,164,031 |
|
|
| 211 | % |
| Revenue, product sales |
|
| 3,202,008 |
|
|
| 3,743,948 |
|
|
| (541,940 | ) |
|
| (14 | )% |
| Total Revenue |
|
| 7,862,077 |
|
|
| 5,239,986 |
|
|
| 2,622,091 |
|
|
| 50 | % |
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Revenue increased by $2,622,091, or 50% for the year ended December 31, 2024 compared to 2023. The increase is primarily due to revenue from our RevenueZen acquisition completed during the first quarter of fiscal 2024 which increased revenue by approximately $2,073,000, our DDS Rank acquisition completed at the end of the second quarter of fiscal 2024, which increased revenue by approximately $142,000, and our Eastern Standard acquisition completed during the fourth quarter of fiscal 2024, which increased revenue by approximately $974,000. This increase was partially offset by a decline in website management revenue, and a decline in digital product sales within the Company’s Mighty Deals subsidiary and a decline in revenue from its SEO Butler subsidiary.
Cost of Revenue
|
|
| For the Year Ended December 31, |
|
| $ Change from prior |
|
| % Change from |
| |||||||
|
|
| 2024 |
|
| 2023 |
|
| year |
|
| prior year |
| ||||
| Cost of revenue, services |
| $ | 2,609,061 |
|
| $ | 837,888 |
|
| $ | 1,771,173 |
|
|
| 211 | % |
| Cost of revenue, product sales |
|
| 708,139 |
|
|
| 1,159,267 |
|
|
| (451,128 | ) |
|
| (39 | )% |
| Total Cost of Revenue |
|
| 3,317,200 |
|
|
| 1,997,155 |
|
|
| 1,320,045 |
|
|
| 66 | % |
Cost of revenue increased by $1,320,045, or 66%, due to the Company’s recent service agency acquisitions offset by the decrease in digital product sales within the Company’s Mighty Deals subsidiary. The Company’s gross profit margins decreased slightly to 57% in the current period compared to 62% in the prior period. The components most significant to the Company’s cost of revenue are the costs of labor for service fulfillment, content creation, website hosting and maintenance costs and the costs of acquiring new inventory products for physical product sales.
Operating Expenses
Selling, General and Administrative
General and Administrative expenses decreased by $263,355 or 4% during the year ended December 31, 2024 as compared to 2023. The decrease was primarily due to a decrease in advertising and marketing costs of $275,000, and a decrease in stock based compensation expense of $535,000, offset by an increase in amortization expense of $226,000 associated with the acquired intangible assets not present in the comparable period, an increase in payroll and contractor costs of $273,000, and a $110,000 increase in other general and administrative costs including 401k contributions and guaranteed payments, referral commissions, and costs related to being a public company.
Our general and administrative expenses consist primarily of consulting related expenses paid to contractors, stock-based compensation, advertising and marketing costs, and other expenses. In the near future, our general and administrative expenses may continue to increase to support business growth. Over the long term, we aim to have general and administrative expenses decreasing as a percentage of revenue.
Professional Fees and Acquisition Costs
Professional fees decreased by $211,659, or 18% during the year ended December 31, 2024 compared to 2023 primarily due to decreased legal and accounting costs associated with the Company’s compliance requirements as a public company and the change in independent public accounting firm during 2024. The Company also incurred $264,731 in acquisition costs during the year ended December 31, 2024 compared to $326,899 during the year ended December 31, 2023, including audit, legal and other professional fees related to acquisitions and potential acquisitions. We expect acquisition costs to remain significant as we continue to grow based on acquisitions.
Impairment Loss
During the year ended December 31, 2024, the Company incurred an impairment loss of $121,000 related to Vital Reaction as a result of decreasing operating cash flows. During the year ended December 31, 2023, after taking into account the lower than expected performances of the following businesses and the rising interest rates, the Company recognized impairment losses of $2,642,649 related to the BCP Media Acquisition, $580,284 related to the BWPS Acquisition, and $903,897 related to the SEO Butler Acquisition, $700,000 related to Mighty Deals website domains and $84,000 related to Pretty Neat Creative, operating under Onfolio Crafts LLC, and $105,937 related to various website domains operating under Onfolio Assets LLC for total aggregate impairment expense $5,016,764. Management has a process to evaluate the viability and profitability of each business. If and when management concludes that a business has a significantly reduced future value, management will assess the asset for possible impairment in the quarter management reaches that conclusion.
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Other Income and Expense
Total other income was $733,906 for the year ended December 31, 2024 compared to other income of $92,778 for the year ended December 31, 2023. The increase in other income was driven by the change in fair value of the contingent consideration owed on the RevenueZen Acquisition, offset by higher interest expenses on the outstanding promissory notes.
Business Segment Results of Operations
We operate in two business segments: Business to Business (“B2B”) and Business to Consumers (“B2C”). We organize our business segments based on the nature of products and services offered, and the economic characteristics of each segment. Following is a brief description of the activities of our business segments:
Selected Financial Data by Business Segment
Net sales and operating profit of the Company’s business segments exclude intersegment sales, cost of sales and profit as these activities are eliminated in consolidation and thus are not included in management’s evaluation of performance of each segment. Sales, cost of sales and operating profit for each of our business segments were as follows:
|
|
| For the Year ended December 31, 2024 |
|
| For the Year ended December 31, 2023 |
| ||
| Revenue |
|
|
|
|
|
| ||
| B2B |
| $ | 4,368,661 |
|
| $ | 1,371,997 |
|
| B2C |
|
| 3,493,416 |
|
|
| 3,867,989 |
|
| Total revenue |
| $ | 7,862,077 |
|
| $ | 5,239,986 |
|
|
|
|
|
|
|
|
|
|
|
| Cost of Sales |
|
|
|
|
|
|
|
|
| B2B |
| $ | 2,561,523 |
|
| $ | 837,888 |
|
| B2C |
|
| 755,677 |
|
|
| 1,159,267 |
|
| Total Cost of Sales |
| $ | 3,317,200 |
|
| $ | 1,997,155 |
|
|
|
|
|
|
|
|
|
|
|
| Operating income (loss) |
|
|
|
|
|
|
|
|
| B2B |
| $ | 4,862 |
|
| $ | (1,033,590 | ) |
| B2C |
|
| 482,100 |
|
|
| (4,040,722 | ) |
| Total business segment operating income (loss) |
|
| 486,962 |
|
|
| (5,074,312 | ) |
| Unallocated items |
|
| (2,994,813 | ) |
|
| (4,168,531 | ) |
| Total consolidated operating income (loss) |
| $ | (2,507,851 | ) |
| $ | (9,242,843 | ) |
Management evaluates performance on our contracts by focusing on net sales and operating profit and not by type or amount of operating expense. Consequently, our discussion of business segment performance focuses on net sales and operating profit, consistent with our approach for managing the business. This approach is consistent throughout the life cycle of our contracts, as management assesses the bidding of each contract by focusing on net sales and operating profit and monitors performance on our contracts in a similar manner through their completion.
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B2B
Our B2B segment includes the results of operations of Eastern Standard, RevenueZen, DDS Rank, SEO Butler, Contentellect, DealPipe and Onfolio LLC. These entities share similar characteristics such as customers being businesses, and being primarily service-related businesses.
B2B revenue increased by $2,996,664 or 218% during the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase is primarily due to revenue from our RevenueZen acquisition completed during the first quarter of fiscal 2024 which increased revenue by approximately $2,073,000, our DDS Rank acquisition completed at the end of the second quarter of fiscal 2024, which increased revenue by approximately $142,000, and our Eastern Standard acquisition completed during the fourth quarter of fiscal 2024, which increased revenue by approximately $974,000. This increase was partially offset by a decline in website management revenue.
B2B total operating income increased by $1,038,452 or 100% during the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase was a result of the increased revenue and gross profit offset by the increase in intangible asset amortization for the newly acquired businesses in the year ended 2024.
B2C
Our B2C segment includes the results of operations of Proofread Anywhere, Mighty Deals, and Vital Reaction. These entities share characteristics such as the end customers being individual consumers, and sales being more focused on product sales, including digital sales.
B2C revenue decreased by $374,573 or 10% during the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease is primarily due to a decline in digital product sales within the Company’s Mighty Deals subsidiary.
B2C incurred total operating income of $482,100 during the year ended December 31, 2024 compared to an operating loss of $4,040,722 during the year ended December 31, 2023, primarily due to the Company’s B2C segment incurring an impairment loss of $4,112,870 compared to no impairment charge for the year ended December 31, 2024.
Liquidity and Capital Resources
Our primary source of operating cash inflows are payments from portfolio companies. In addition, the Company has raised $1,500,000 pursuant to a private offerings of Series A preferred stock through June 30, 2025, $976,800 in notes payable and repaid $2,164,498 on its acquisition notes.
Our Company’s recurring losses from operations and negative cash flows from operations and our need to raise additional funding to finance our operations raise substantial doubt about our ability to continue as a going concern. Accordingly, management and our auditor have concluded that substantial doubt exists regarding our ability to continue as a going concern. Our audited financial statements contained in our Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on April 16, 2025 were prepared on a going concern basis, and contemplated the realization of assets and satisfaction of liabilities in the ordinary course of business. We believe that our cash and cash equivalents as of June 30, 2025, and the future operating cash flows of the entity may not provide adequate resources to fund ongoing cash requirements for the next twelve months. If sources of liquidity are not available or if we cannot generate sufficient cash flow from operations during the next twelve months, we may be required to obtain additional sources of funds through additional operational improvements, capital market transactions, asset sales or financing from third parties, a combination thereof or otherwise. We cannot provide assurance that these additional sources of funds will be available or, if available, would have reasonable terms. If we are unable to obtain sufficient funding, our business, prospects, financial condition and results of operations will be materially and adversely affected, and we may be unable to continue as a going concern.
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Cash used in operating activities
Net cash used in operating activities was $575,164 and $763,747 for the six months ended June 30, 2025 and 2024, respectively. The decrease was primarily from the increase in revenues and decreased general and administrative costs as the Company expanded its operations through its business acquisitions in the past year.
Net cash used in operating activities was $1,168,363 and $2,751,838 for the years ended December 31, 2024 and 2023. The decrease was primarily from the increase in revenues and decreased general and administrative costs as the Company expanded its operations through its business acquisitions in the past year.
Cash used in investing activities
Net cash used in investing activities was $0 and $304,000 for the six months ended June 30, 2025 and 2024, respectively. The cash used in investing activities was primarily for the purchase of businesses in the prior period and additional cost method investments.
Net cash provided by investing activities was $451,000 for the years ended December 31, 2024 compared to cash used in investing activities of $850,000 for the year ended December 31, 2023. For the year ended December 31, 2024 the cash provided was from the sale of our WP Folio subsidiary assets for $780,000 offset by cash used to purchase additional businesses and cost method investments. For the year ended December 31, 2023, the Company used $850,000 to acquire a single business during the first quarter.
Cash provided by financing activities
Cash flows provided by financing activities was $585,097 for the six months ended June 30, 2025 compared to cash provided by financing activities of $415,749 during the six months ended June 30, 2024. During the 2025 period, we received $865,965 in proceeds from sales of Series A preferred stock and we paid $201,848 in dividends to preferred stockholders, made payments totaling $266,295 on notes payable, made payments totaling $133,845 related to contingent consideration and made distributions totaling $37,680 to our non-controlling interest holders. During the 2024 period, we received $10,000 in proceeds from sales of Series A preferred stock, $417,900 in proceeds from notes payable, and $200,000 in proceeds from related party notes payables, made payments of $151,035 in dividends to preferred stockholders, made payments totaling $56,516 on notes payable, made payments of $1,000 on related party notes payable, and $3,600 in distribution to non-controlling interest holders.
Cash flows from financing activities was cash provided of $326,336 and cash used of $2,156,650 for the years ended December 31, 2024 and 2023. During the year 2024, we received $881,650 in proceeds from notes payable and $200,000 in proceeds from notes payable related parties which was offset by the payments of $321,442 in dividends to preferred stockholders, payments made on notes payable totaling $386,339, payments of $1,000 on related party notes payable, payments on contingent consideration of $59,093, and distributions of $20,400 to the non-controlling interest holders of our majority owned subsidiaries. During the year 2023, we raised $565,000 from the sales of preferred stock in a private exempted offering, which was offset by the repayment of the acquisition notes payable of $2,439,000, payments of preferred dividends of $213,691, and payments on note payables of $68,959.
Critical Accounting Policies
The following are the Company’s critical accounting policies:
Investment in Unconsolidated Entities – Equity and Cost Method Investments
We account for our interests in entities in which we are able to exercise significant influence over operating and financial policies, generally 50% or less ownership interest, under the equity method of accounting. In such cases, our original investments are recorded at cost and adjusted for our share of earnings, losses and distributions. We account for our interests in entities where we have virtually no influence over operating and financial policies under the cost method of accounting. In such cases, our original investments are recorded at cost and any distributions received are recorded as income. Our investments in OnFolio JV I, LLC (“JV I”), OnFolio JVII, LLC (“JVII”) and OnFolio JVIII, LLC (“JVIII”) are accounted for under the cost method. All investments are subject to our impairment review policy.
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The current investment in unconsolidated affiliates accounted for under the equity method consists of a 35.8% interest in OnFolio JV IV, LLC (“JV IV”), which is involved in the acquisition, development and operation of websites to produce adverting revenue.
Variable Interest Entities
Variable interest entities (“VIEs”) are consolidated when the investor is the primary beneficiary. A primary beneficiary is the variable interest holder in a VIE with both the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and the obligation to absorb losses, or the right to receive benefits that could potentially be significant to the VIE. Management concluded that the joint ventures do not qualify as variable interest entities under the requirements of ASC 810. The Company accounts for its investments in the joint ventures under either the cost or equity method based on the equity ownership in each entity.
Revenue Recognition
The Company primarily earns revenue through website management, digital services, advertising and content placement on its websites, product sales, and digital product sales. Management services revenue is earned and recognized on a monthly basis as the services are provided. Advertising and content revenue is earned and recognized once the content is presented on the Company's sites in accordance with the customer requirements. Product sales are recognized at the time the product is shipped to the customer. In certain circumstances, products are shipped directly by a supplier to the end customer at the Company's request. The Company determined that it is the primary obligor in these contracts due to being responsible for fulfilling the customer contract, establishing pricing with the customer, and taking on credit risk from the customer. The Company recognizes revenue from these contracts with customers on a gross basis. Digital product sales represent electronic content that is transferred to the customer at time of purchase. The Company also earns revenue from online course subscriptions that may have monthly or annual subscriptions. In circumstances when a customer purchases an annual subscription upfront, the Company defers the revenue until the performance obligation has been satisfied.
Revenue is recognized based on the following five step model:
|
| - | Identification of the contract with a customer |
|
| - | Identification of the performance obligations in the contract |
|
| - | Determination of the transaction price |
|
| - | Allocation of the transaction price to the performance obligations in the contract |
|
| - | Recognition of revenue when, or as, the Company satisfies a performance obligation |
The Company amortizes acquired definite-lived intangible assets over their estimated useful lives. Other indefinite-lived intangible assets are not amortized but subject to annual impairment tests.
Long-lived Assets
Property and equipment are stated on the basis of historical cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. Major renewals and improvements are capitalized, while minor replacements, maintenance and repairs are charged to current operations.
In accordance with ASC 360 “Property Plant and Equipment,” the Company reviews the carrying value of intangibles subject to amortization and long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of long-lived assets is measured by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any, exceeds its fair market value.
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Off-balance sheet arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Contractual commitments
BWPS Business Acquisition: The Company may be required to pay up to $60,000 to Hoang Huu Thinh, contingent upon the BWPS business meeting certain monthly gross revenue targets within three years from the closing date. No earn-out payments have been made as of June 30, 2025. (See Note 13 for further details.)
RevenueZen Acquisition: The Company has determined the final amount obligated to pay to the sellers of RevenueZen, contingent upon the business achieving a specified gross profit threshold within one year to be $680,662. On February 28, 2025, the Company and the RevenueZen sellers agreed to the final earn-out amount to be $682,000 and modified the payment terms to be paid with a cash payment of $72,000, $100,000 to be paid through profit sharing by using 30% of Net Operating Income, $100,000 in value for $79,240 stock options to purchase shares of common stock, $70,000 in Series A preferred stock, and $340,000 in a promissory note. The promissory note, has a term of 60 months and accrues interest at 19%. The stock options have an exercise price of $1.34, have a term of 10 years, and are vested immediately. As of June 30, 2025, the Company estimated the remaining obligations owed under the revenue share obligation to be $85,975.
First Page Acquisition: The Company agreed to pay a revenue share amount equal to 18% of gross revenues for the acquired customers for 3 years following the acquisition date. As of June 30, 2025, the Company estimated the remaining obligations owed under the revenue share provisions to be $121,056 resulting in a change in the fair value of the continent consideration of $72,050.
Company Overview
Onfolio Holdings Inc. was incorporated on July 20, 2020 under the laws of Delaware to acquire and develop high-growth and profitable online businesses. Unless the context otherwise requires, all references to “our Company,” “we,” “our” or “us” and other similar terms means Onfolio Holdings Inc., a Delaware corporation, and our wholly owned subsidiaries.
We acquire controlling interests in and actively manage small online businesses that we believe (i) operate in sectors with long-term growth opportunities, (ii) have positive and stable cash flows, (iii) face minimal threats of technological or competitive obsolescence and (iv) can be managed by our existing team or have strong management teams largely in place. Through the acquisition and growth of a diversified group of online businesses with these characteristics, we believe we offer investors in our shares an opportunity to diversify their own portfolio risk.
Our long-term goal is to build a world-class holding company that acquires, operates, and scales profitable online businesses. We aim to do this through operational excellence, smart capital deployment, strong leadership and infrastructure, and the maintenance of an innovator and small business owner’s mindset.
Our ideal acquisition candidate has the following characteristics:
|
| · | Proven customer acquisition track record ; |
|
| · | A product, physical or digital with satisfied customers and brand equity; |
|
| · | Upwards growth trajectory; |
|
| · | Growing industry or sector; |
|
| · | Attractive purchase price; |
|
| · | Under-utilized marketing assets or channels; |
|
| · | Passionate, high-value audience or customer base; |
|
| · | Attractive profit margin and cashflow; and |
|
| · | Diversified traffic and revenue sources. |
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We currently operate in the following business models: D2C eCommerce, B2B SEO and marketing services as well as B2B digital products. We anticipate a combination of continuous expansion of these verticals and increasing our share within them. Our business model is not based around success in a particular “niche”, but rather focusing on certain verticals and mediums where online marketing has a key part to play (either as a means of growth for the businesses themselves, or as the service the businesses provide).
Market Opportunity
We acquire controlling interests in and actively manage small online businesses. We characterize small online businesses as those that generate annual cash flows of up to $5 million per year. We believe that the acquisition market for these online businesses is highly fragmented and often provides opportunities to purchase at attractive prices and achieve positive outcomes for our shareholders. We believe this is driven by the following factors:
|
| · | third-party financing for these acquisitions is often less available or terms are less favorable for the borrower; |
|
| · | sellers of these online businesses frequently consider non-economic factors, such as legacy or the effect of the sale on their employees; |
|
| · | these online businesses are more likely to be sold outside of an auction process or as part of a limited process; |
|
| · | “add-on” acquisitions can often be completed at attractive multiples of cash flow |
|
| · | many would-be buyers of these online businesses are restricted by their inability to operate these online businesses; and |
|
| · | the existence of a sweet spot where online businesses are too big for small/individual buyers and too small for other institutional buyers. We desire to be among the best resourced and most experience buyers in this acquisition sector. |
Competitive Strengths
We believe that the following competitive strengths contribute to our success and distinguish us from our competitors:
|
| · | our senior management team has approximately 40 years of combined experience in Internet connected businesses. We believe that we have assembled a senior management team with highly complementary skills and experiences in the industry, accounting, finance, and acquisitions; |
|
| · | our team is decentralized and cross border, which enables us to identify, recruit and retain high quality talent wherever they reside; |
|
| · | many buyers focus on one vertical or niche, which limits their opportunity and concentrates their risk. We operate in a wider industry with competence in multiple models; |
|
| · | we believe our disciplined approach to our target market provides opportunities to methodically purchase attractive online businesses at values that are accretive to our shareholders; |
|
| · | we believe our management team’s strong relationships with industry executives, accountants, attorneys, business brokers, commercial and investment bankers, and other potential sources of acquisition opportunities offer us substantial opportunities to assess small online businesses available for acquisition; |
|
| · | we believe our financial structure allows us to acquire online businesses efficiently with little or no third-party financing contingencies and, following acquisition, to provide our subsidiaries with access to growth capital, without being dependent on third-party transaction financing; |
|
| · | it has been our experience that our ability to acquire online businesses without the cumbersome delays and conditions typical of third-party transactional financing is appealing to sellers of online businesses who are interested in confidentiality and certainty to close; |
|
| · | we believe that as a public company, we will become a preferred buyer of these online businesses, due to the above factors being added to the integrity that a public company brings; and |
|
| · | we believe that private company operators looking to sell their online businesses may consider us an attractive purchaser because of our ability to provide ongoing strategic and financial support for their website. |
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Strategy
In seeking to maximize shareholder value, we focus on finding online businesses with under-utilized marketing assets, strong growth, and areas of operational improvements. We then accelerate what is working and fix what is not.
Acquisition Strategy
Our strategy to grow our business involves the acquisition of online businesses that we expect to both complement existing verticals, existing online businesses, and allow us to add new verticals. We are experienced in digital marketing and believe the key to growing online businesses is the leverage of audiences. We believe that attractive opportunities to make such acquisitions will continue to present themselves as a result of the abundance of selling founders with a limited skillset or narrow focus. This provides us with an opportunity for optimization and growth in the average small online businesses that is for sale. We benefit from our management team’s ability to identify diverse acquisition opportunities in a variety of industries. In addition, we rely upon our management team’s experience and expertise in researching and valuing prospective target online businesses, as well as negotiating the ultimate acquisition of such target website.
We believe there are opportunities to acquire “distressed”, albeit profitable, online businesses, or where the sellers have not optimized the business to the fullest. The opportunity (both short and long term) is our ability to find online businesses where there are leverage points and growth opportunities that the current owners have not fully utilized. Historically, there have been ample of these for sale within our target price zone, which provides us with numerous opportunities to buy high quality business at reasonable prices. We use a series of quantitative, qualitative, financial, and legal criteria by which we evaluate each potential acquisition. We plan to acquire businesses with an income focus, and our target is to acquire businesses generating income of 20% to 30% internal rate of return, although there can be no guarantee that we will find such businesses and achieve this target. Among the factors considered are: (1) the business track record of revenue and earnings; (2) the type of business; (3) the experience and skill of the active management team of the business; (4) our assessment of the longevity and staying power of the underlying business; and (5) the potential for revenue growth and capital appreciation.
Additionally, as our portfolio has grown, we are becoming more strategic with our acquisition targets and seek acquisitions where 1+1=3. This means that such an acquisition would either fill a gap in our organizational chart, allow an existing portfolio company to grow, or enable one or more of our existing portfolio companies grow the target company. We currently consider the following types of business models to be ideal 1+1=3 acquisitions for our existing portfolio:
|
| a.) | Online courses that have overlap with our existing course portfolio and their audiences; and |
|
| b.) | Online services that have service and client overlap with our existing agency portfolio. |
Over time, we expect the definition of an ideal 1+1=3 acquisition to evolve and widen as our portfolio grows and our surface area for strategic acquisitions expands.
We typically acquire ownership in our businesses utilizing one or more of the following: cash, debt, shares of our Series A Preferred stock, rollover interest or joint venture with one of our Onfolio Agency SPV vehicles that utilizes its own cash to acquire a portion of the acquired business. Our Company, through our subsidiary Onfolio Management LLC, is the manager of Onfolio Agency SPV, LLC (“OA SPV”), and Onfolio Agency SPV 2, LLC (“OA SPV 2”), collectively referred to as “OA SPVs”. Our Company does not hold any equity interest in the OA SPVs, but will receive 10% of any cash distributions paid by OA SPV, and 20% of any cash distributions paid by OA SPV 2, to its members, when declared, as the management fee.
As we grow our team, we may not be able to find, vet, and acquire businesses at the speed required for short term financial performance. We rely on our team’s ability to evaluate potential acquisitions. Further, we believe our Company can find acquisition opportunities where the seller has not fully optimized their business. We have grown businesses where digital marketing is the leverage point, and our experience and multi-channel skillset allows us to add a lot of value to existing efforts. This may give us the opportunity to continue to grow the majority of our acquisitions organically. We also believe that due to our corporate structure, our comfort with utilizing a remote workforce, and our status as a public company, we may be able to attract and incentivize talent to help both with our deal flow and acquisition efforts, and our organic growth.
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Quality Assurance Programs and Processes
Quality Assurance (“QA”) practices differ depending on the products. Before we acquire any online business that deals with physical products, we research reviews of the products online to see if there is a large number of complaints. We look at the refund rate, and if dealing with a manufacturer on somewhere such as Alibaba, we also look at that manufacturer’s reviews. We also ask for any relevant certificates, licenses, or compliance documents.
In some instances, we may purchase the products ourselves, and this is something we may develop more procedures around if we increase our eCommerce acquisition activities. In the case of Vital-Reaction.com, for our supplement products, we require that our manufacturer be in compliance with cGMP guidelines. We require the manufacturer provide a 3rd party Certificate of Analysis (COA) of the products, which we then replicate with an independent 3rd party laboratory.
Before we acquire service businesses, such as those offering SEO or digital marketing services, we research and evaluate the company's reputation and acquire feedback across various platforms to gauge overall customer satisfaction. Additionally, we assess the rate of client retention and contract renewals, as these are strong indicators of the quality and value of the services provided. We may also trial their products to evaluate the quality of the services provided.
We use similar practices to conduct spot checks on the services we provide once acquired, using client retention and feedback to gauge customer satisfaction with the services provided.
Management Strategy
Our management strategy involves a combination of sharing resources across online businesses, and employing dedicated managers of individual online businesses. We set clear objectives for our businesses in collaboration with individual managers, and then entrust them with the autonomy to execute strategic decisions within these established parameters. We support them where necessary, but otherwise empower these subject matter experts with the operational freedom to grow the online businesses in line with their responsibilities and our shared objectives.
Our Online Businesses
Our Company is structured as follows:
We own and/or manage the following 20 online businesses:
Pace Generative LLC – Own
In May 2025, we formed Pace Generative LLC, a start-up Generative Engine Optimization service that help brands appear in AI-generated answers, which is a rapidly emerging opportunity in digital discovery and trust-building. Pace Generative helps brands increase their visibility and traffic from AI answer engines, such as Google AI overviews, ChatGPT, Perplexity, and Grok. By using traditional content marketing, SEO, and PR techniques, along with new proprietary methods, Pace Generative helps optimize businesses for generative engine optimization. Our Company holds a 100% ownership stake in Pace Generative.
Eastern Standard - Own
In October 2024, we acquired Eastern Standard, a premier digital agency specializing in brand strategy, website development, and digital marketing. Eastern Standard provides tailored solutions across various industries, helping clients enhance their online presence through strategic branding, search engine optimization (SEO), and user-focused design. Our Company holds a 53% ownership stake in Eastern Standard, while the OA SPVs maintain a 37% equity interest, and the Eastern Standard founders maintain a 10% roll-over equity interest and continue to serve in leadership roles on the Eastern Standard team.
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DDSrank.com - Own
In June 2024, we acquired DDS Rank, an online service provider that works with dental professionals to grow their online presence and patient base. DDS Rank offers digital marketing services such as search-engine optimization, paid advertising, and web design. DDS Rank enjoys a strong reputation in its field, specializing in helping dentists improve search engine visibility and attract more patients. Our Company holds a 66% ownership stake in DDS Rank, while OA SPV maintains a 34% equity interest.
RevenueZen.com - Own
In January 2024, we acquired RevenueZen.com, an online service provider that works with B2B brands to grow their organic and referral traffic. ReveueZen offers B2B marketing services such as search-engine optimization, Linkedin marketing and content marketing. RevenueZen enjoys a strong reputation in its field, specializing in working with startups, healthcare, professional services, renewable energy, and financial services businesses, among others. Our Company holds an 88% ownership stake in RevenueZen, while RevenueZen founders received a 12% roll-over equity interest and will serve in leadership roles in the Onfolio-owned RevenueZen team.
Contentellect.com -Own
In January 2023, we acquired Contentellect.com. Contentellect helps small-and medium-sized businesses scale their content with blog writing, link building, and more. The service offering consists of online (i) content writing services (including white label content creation, eBook writing and eCommerce product description writing), (ii) website link building services (including white label link building, HARO link building and SEO outreach services), (iii) social media marketing services, and (iv) virtual assistant services to individuals, businesses and agencies. The content created helps customers by improving organic traffic via search engines, enables them to conduct thought-leadership, and gives sales and marketing teams relevant and usable content at the top and middle of the marketing funnel. Our Company holds a 100% ownership stake in Contentellect.com.
ProofreadAnywhere.com/WorkAtHomeSchool.com/WorkYourWay2020.com - Own
In October 2022, we acquired ProofreadAnywhere.com/WorkAtHomeSchool.com/WorkYourWay2020.com, which provide extensive online resources in the form of courses, workshops and blog posts for readers looking to train and become professional proofreaders. The curriculum helps users spot common errors, catch grammatical mistakes, and in turn, improve their proofreading skills and launch new careers. These online businesses also sell digital books covering several topics such as writing skills and freelancer taxation, and generate revenue through their courses, workshops, and eBook sales, each sold individually and in bundles. Our Company holds a 100% ownership stake in ProofreadAnywhere.com / WorkAtHomeSchool.com / WorkYourWay2020.com.
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SEOButler.com - Own
In October 2022, we acquired SEOButler.com, an online provider of extensive products within the SEO niche including content, guest posting, social signals, and citations. The website deploys a custom-built Order Management System (OMS), designed to make the content creation process highly scalable while eliminating the bottlenecks that could otherwise impede the growth of a productized service business that relies primarily on human writers and editors. Our Company holds a 100% ownership stake in SEOButler.com.
Preventdirectaccess.com/Passwordprotectwp.com – Divested December 2024
In October 2022, we acquired Preventdirectaccess.com/Passwordprotectwp.com, which provides a suite of optimization, customization, privacy and security products and services for WordPress websites, with the core offerings consisting of (i) the WordPress plugin known as PREVENT DIRECT ACCESS available via the website preventdirectaccess.com, and (ii) the WordPress plugin known as PASSWORD PROTECT WORDPRESS available via the website passwordprotectwp.com. Customers of these websites utilize these online businesses’ security plugins that allow bloggers, creators, agencies, and SMBs to protect their digital assets, products, and content. Our Company held a 100% ownership stake in Preventdirectaccess.com / Passwordprotectwp.com (“WPFolio LLC”) until the sale of the business operations for $780,000 in an all-cash transaction.
Mightydeals.com – Own
In January 2021, we acquired Mightydeals.com and its related domain names. Mightydeals.com is a vendor of design bundles and deals for freelance designers, agencies, hobbyists and solopreneurs. The online business works with creators of design templates, fonts, software, and training (the vendors) and offers their works at steep discounts. It then shares the revenue with the vendors. Our Company holds a 100% ownership stake in Mighty Deals LLC, which owns Mightydeals.com.
Vital-Reaction.com – Own
In December 2020, we acquired Vital-Reaction.com. Vital-Reaction.com is an online supplements business providing molecular hydrogen tablets, clinical and retail inhalers, dermal therapy devices, grounding mats, and other related products. The online business operates out of Boulder, Colorado, and ships across the U.S. and internationally. Products are sourced from within the US, Japan, and China. Customers range from retail customers to U.S. clinicians and doctors who resell or refer customers. Our Company holds a 100% ownership stake in Vital Reaction LLC, which owns Vital-Reaction.com.
Allthingsdogs.com – Own
In December 2020, we acquired Allthingsdogs.com. Allthingsdogs.com is a publishing website in the pet dog vertical. It publishes informational articles related to every breed of dog. The information ranges from how to care for a certain breed, to the best types of dog food, to training tips. As well as advertising revenue, the website earns money from I’ve affiliate commissions and sales of its own ebooks and informational products. This website is one of our three online businesses in the dog vertical, providing us with significant growth opportunities and operational efficiencies, plus economies of scale as we offer digital products, physical products, and work with key vendors in the industry. As our audience grows into the hundreds of thousands across the Allthingsdogs.com, Woofwhiskers.com and Perfectdogbreeds.com sites, we expect the pet dog aspect of our portfolio to grow in stature and revenue. Our Company holds a 100% ownership stake in Allthingsdogs.com.
DealPipe.io - Own
In November 2023, we launched DealPipe, a service for sourcing "off-market" acquisition targets. Dealpipe utilizes our Company’s experience sourcing off-market deals for ourselves, offering this service to others. The DealPipe team is excited to help serial acquirers find online or offline businesses to add to their portfolios, and to help business owners find good homes for their businesses. Dealpipe earns monthly retainers, plus a success fee based on a percentage of the successful acquisition price, creating a lucrative business model. Our Company holds a 100% ownership stake in DealPipe.io
Fishkeepingworld.com – Manage/Own
In January 2020, we began to manage Fishkeepingworld.com. Fishkeepingworld.com is a publishing website in the ornamental fish and aquarium space. It provides information for hobbyists on how to care for their fish, maintain their tank, and level up their hobby. Our Company holds a 13.63% ownership stake in Onfolio JV I, LLC, which owns Fishkeepingworld.com and we receive a management fee of $2,500 per month and 50% profit share of any profits above $12,500 per month for managing this website. For example, if the website produced $2,000 net profit per month before we started managing it, and it produced $3,000 per month afterwards, we would receive 50% of the additional $1,000.
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Asubtlerevelry.com – Manage/Own
In January 2020, we began to manage Asubtlerevelry.com. Asubtlerevelry.com covers topics ranging from hosting a house party, to bachelorette party ideas, to recipes, to crafts. The site is a pure content and display advertising site. Long term, the site is forming a strong part of the growing craft/DIY vertical that several of our other managed sites are in. Our Company holds a 10.70% ownership stake in Onfolio JV II LLC, which owns Asubtlerevelry.com and we receive a management fee of $1,500 per month and 50% profit share of any profits above $16,500 for managing this website. For example, if the website produced $2,000 net profit per month before we started managing it, and it produced $3,000 per month afterwards, we would receive 50% of the additional $1,000.
Wowfreestuff.co.uk – Manage/Own
In April 2020, we began to manage Wowfreestuff.com. Wowfreestuff.com has a large audience of hundreds of thousands of people in the UK who want to be notified when companies do freebies and giveaways. Many of these companies pay a commission to the site to help promote their freebies. Our Company holds a 13.59% ownership stake in Onfolio JV III LLC, which owns Wowfreestuff.com and we receive a management fee of $3,000 per month and 50% profit share of any profits above $16,500 for managing this website. For example, if the website produced $2,000 net profit per month before we started managing it, and it produced $3,000 per month afterwards, we would receive 50% of the additional $1,000.
Woofwhiskers.com – Manage/Own
In June 2020, we began to manage Woofwhiskers.com. Woofwhiskers.com is a website reviewing dog food, providing high quality reviews, and receiving lucrative referral fees from dog food companies. The dog food space is competitive, and vendors build strong relationships with high quality publishers to help promote their brands. Woofwhiskers.com is one such website which enjoys strong relationships in the space. Over time, Woofwhiskers.com is building its own audience of dog lovers and will launch its own digital products, and eventually physical products. This website is one of our three online businesses in the dog vertical, providing us with significant growth opportunities and operational efficiencies, plus economies of scale as we offer digital products, physical products, and work with key vendors in the industry. As our audience grows into the hundreds of thousands across the Allthingsdogs.com, Woofwhiskers.com and Perfectdogbreeds.com sites, we expect the pet dog aspect of our portfolio to grow in stature and revenue. These online businesses earn revenue from display advertising and from affiliate commissions. Our Company holds a 35.8% ownership stake in Onfolio JV IV LLC, which owns Woofwhiskers.com and Perfectdogbreeds.com.
Perfectdogbreeds.com – Manage/Own
In October 2020, we began to manage Perfectdogbreeds.com. Perfectdogbreeds.com is a guide to owning all the different breeds of dogs in existence. Similar to Allthingsdogs.com (which focuses on care guides), Perfectdogbreeds.com earns money from display advertising, and its high traffic volume makes this is a lucrative monetization option. This website is one of our three online businesses in the dog vertical, providing us with significant growth opportunities and operational efficiencies, plus economies of scale as we offer digital products, physical products, and work with key vendors in the industry. As our audience grows into the hundreds of thousands across the Allthingsdogs.com, Woofwhiskers.com and Perfectdogbreeds.com sites, we expect the pet dog aspect of our portfolio to grow in stature and revenue. The website earns revenue from display advertising. Our Company holds a 35.8% ownership stake in Onfolio JV IV LLC, which owns Woofwhiskers.com and Perfectdogbreeds.com.
Craftwhack.com – Manage/Own
In May 2020, we began to manage Craftwhack.com. Craftwhack.com is a website with free content teaching people how to perform certain arts and crafts. It earns revenue from affiliate commissions and display advertising. Similar to the dog vertical, we manage or own numerous sites in the crafting/DIY/home vertical, and plan to continue growing and improving our presence in the space. Audiences are passionate in this industry, and our skills in content publishing, eCommerce, and digital products gives us ample opportunity to add value and grow revenues in the space. As we now have more presence and more of our owned products in the space, we plan to use Craftwhack.com to continue to grow revenues across the portfolio and generate profits in its own right. Our Company receives 20% of free cash flows for managing this website and we hold a 20% ownership stake in Onfolio Groupbuild 1 LLC, which owns Craftwhack.com.com and BackgroundHawk.com.
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Backgroundhawk.com – Manage/Own
In October 2020, we began to manage Backgroundhawk.com. Backgroundhawk.com is a review website and sits squarely in the growing and lucrative background check and legal check industry. Our Company receives 20% of free cash flows for managing this website. Our Company receives 20% of free cash flows for managing this website and we hold a 20% ownership stake in Onfolio Groupbuild 1 LLC, which owns Craftwhack.com.com and BackgroundHawk.com.
Outreachmama.com – Manage
In November 2020, we began to manage Outreachmama.com. Outreachmama.com is an SEO/content marketing services online business working with individuals and agencies to grow their presence in Google.com. The owners of this online business are also Onfolio shareholders. Our Company receives a profit share of 50% of growth of profits above what the site was earning on average before we began managing it, plus a management fee of $4,000 per month. Outreachmama.com is one of our two online businesses in the SEO vertical, providing us with significant growth opportunities and operational efficiencies, plus economies of scale. Onfolio sometimes makes use of these services too.
Getmerankings.com – Manage
In October 2021, we began to manage Getmerankings.com. Getmerankings.com is another SEO/content marketing online business. The owners of this online business are also Onfolio shareholders. Our Company receives a profit share of 50% of growth of profits above what the site was earning on average before we began managing it plus a management fee of $4,000 per month for managing this online business. Getmerankings.com is one of our two online businesses in the SEO vertical, providing us with significant growth opportunities and operational efficiencies, plus economies of scale. Onfolio will likely make use of these services too.
2023 and 2024 Divestitures and Impairments
In January 2023, the Company shut down the business operations of Digitallyapproved.com, which offered a newsletter on social media marketing, and a Pinterest management agency.
In November 2023, the Company shut down the business operations of Prettyneatcreative.com, an eCommerce business in the diamond painting niche.
During the year ended December 31, 2023, the Company recognized impairment losses of $2,642,649 related to the BCP Media Acquisition, $580,284 related to the BWPS Acquisition, and $903,897 related to the SEO Butler Acquisition, $700,000 related to Mighty Deals website domains and $84,000 related to Pretty Neat Creative, operating under Onfolio Crafts LLC, and $105,937 related to various website domains operating under Onfolio Assets LLC for total aggregate impairment of $5,016,765 related to the above acquisitions, as a result of lower than expected cash flows from the acquired businesses and an increase in interest rates leading to a higher discount rate used.
In December 2024, the Company sold the business operations of BWPS (“WPFolio LLC)” for $780,000 in an all-cash transaction to align the wider portfolio more closely with the growing B2B agency and information products business lines.
Competition
We experience competition at both the acquisition company level and individual portfolio company level. There is an increased level of acquisition activity in the online businesses space from both new entrants and existing companies. We may compete for acquisitions with companies such as InterActiveCorp, FuturePLC, WeCommerce Holdings, Emerge Commerce, Red Ventures and Tiny to name a few.
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We may sometimes find our individual brands competing against one another, but the main factor we compete on is deal flow and closing acquisitions at an attractive price. In the acquisition space we believe the principle competitive factors are:
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| · | reputation of acquiring company; |
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| · | valuation of target company; |
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| · | convenience of due diligence; and |
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| · | time to closing. |
At the portfolio level, Eastern Standard may compete with other agencies offering similar digital marketing and web design services such as OHO Interactive, iFactory, Digital Wave, and Digital Silk, amongst others. In this industry, we believe the principal competitive factors are:
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| · | quality of digital marketing services and execution; |
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| · | experience and expertise of their team; |
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| · | customer satisfaction; and |
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| · | competitive pricing and value for money. |
For DDS Rank may compete with other agencies offering similar dental SEO and marketing services such as The Dental SEO Company, Best Results Dental Marketing, and PatientGain, amongst others. In this industry, we believe the principal competitive factors are:
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| · | patient lead generation for dentists; |
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| · | quality of SEO and marketing strategies; |
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| · | experienced dental SEO experts; and |
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| · | customer satisfaction from dentists. |
For RevenueZen may compete with other agencies offering similar digital marketing services such as Skale, SaaSpirin, and SimpleTiger, amongst others. In this industry, we believe the principle competitive factors are:
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| · | client sales pipeline generation; |
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| · | quality of methodology and execution; |
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| · | experienced, high output strategists; and |
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| · | customer satisfaction. |
For Contentellect, the main competitors include Fat Joe, Outreach Monks, Brand Featured and Writing Studio. In this industry, we believe the principle competitive factors are:
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| · | quality of deliverables; |
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| · | quality of service and communication; |
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| · | scalability; and |
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| · | customer satisfaction. |
Proofread Anywhere may compete with other courses in the freelancing space, such Knowadays, The Proofreading Business Coach, Bookkeeper Launch, and Virtual Savvy, among others. In this industry we believe the primary competitive factors are:
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| · | quality of product; |
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| · | communication of benefits; |
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| · | price of course; and |
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| · | positive and recent third-party reviews. |
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SEOButler may compete with other link building agencies, such as Loganix, SirLinksALot, LinkBuilder, Fat Joe, and Outreach Monks. In this industry, we believe the principle competitive factors are:
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| · | quality of deliverables; |
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| · | quality of service and communication; |
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| · | scalability; and |
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| · | customer satisfaction. |
Vital Reaction competes with brands such as DrinkHRW, DrMercola and Quicksilver Scientific. In this industry we believe the principle competitive factors are:
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| · | quality of product; |
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| · | communication of benefits; |
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| · | price of product; |
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| · | safety; and |
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| · | customer satisfaction. |
For MightyDeals, the main competitors are other marketplaces or “deal” providers, such as AppSumo, FontBundles, CreativeMarket, and a few others. We mostly compete for securing exclusive deals with vendors, and brand loyalty.
We believe in this industry the principle competitive factors are:
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| · | volume and popularity of deals; |
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| · | pricing of deals and relative discount; and |
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| · | exclusivity of deals. |
Pace Generative faces competition from other agencies offering G.E.O services, such as Siege Media, First Page Sage, and Omniscient Media. These are currently legacy SEO agencies that have started offering competing services.
In the future, Pace may also face competition from more dedicated GEO agencies, or GEO platforms like Profound or AthenaHQ if they start to offer their own services. In this industry, we believe the principle competitive factors are:
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| · | Quality of deliverables; |
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| · | Quality of service and communication; |
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| · | Results; |
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| · | Price; and |
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| · | Scalability. |
Dealpipe faces competition from other Corporate Development consultants, investment bankers, and lead generation firms dedicated to finding acquisition targets. In this industry, we believe the principle competitive factors are:
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| · | Speed of lead generation; |
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| · | Volume of lead generation; |
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| · | Quality of lead generation; and |
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| · | Integrity and authenticity. |
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Intellectual Property
We regard some aspects of our internal operations, software, and documentation as proprietary, and rely primarily on a combination of contract and trade secret laws to protect our proprietary information. We believe, because of the rapid pace of technological change in the computer software industry, trade secret and copyright protections are less significant than factors such as the knowledge, ability, and experience of our employees, frequent software product enhancements, and the timeliness and quality of our support services. The source code for our proprietary software is protected as a trade secret. We enter into confidentiality or license agreements with our employees, consultants, and clients, and control access to and distribution of our software, documentation, and other proprietary information. We cannot guarantee that these protections will be adequate or that our competitors will not independently develop technologies that are substantially equivalent or superior to our technology.
We do not believe our software products or other proprietary rights infringe on the property rights of third parties. However, we cannot guarantee that third parties will not assert infringement claims against us with respect to current or future software products or that any such assertion may not require us to enter into royalty arrangements or result in costly litigation.
We have registered trademark and copyrights for the Vital Reaction and Mighty Deals company name. We may file trademarks, copyrights, and patents for our other online businesses as well.
Government Regulation
We are subject to a variety of domestic and foreign laws and regulations in the U.S. and abroad involving matters that are important to (or may otherwise impact) our various websites, such as broadband internet access, online commerce, privacy and data security, advertising, intermediary liability, consumer protection, taxation, worker classification and securities compliance. These domestic and foreign laws and regulations, which in some cases can be enforced by private parties in addition to government entities, are continually evolving and can be subject to significant change. As a result, the application, interpretation and enforcement of these laws and regulations (and any amended, proposed or new laws and regulations) are often uncertain, particularly in the Internet industry, and may vary from jurisdiction to jurisdiction and over time, which could result in conflicts with the current policies and practices of our websites.
Because we conduct substantially all of our business on the Internet, we are particularly sensitive to laws and regulations that could adversely impact the popularity or growth in use of the Internet and/or online products and services generally, restrict or otherwise unfavorably impact whether or how we may provide our products and services, regulate the practices of third parties upon which we rely to provide our products and services and/or undermine an open and neutrally administered Internet access. For example, in December 2017, the U.S. Federal Communications Commission (the “FCC”) adopted the Restoring Internet Freedom Order. This order, which was released in January 2018 and took effect in June 2018, reversed net neutrality protections in the United States that had been in place since 2015, including the repeal of specific rules against blocking, throttling or “paid prioritization” of content or services by Internet service providers. Also, Section 230 of the Communications Decency Act of 1996 (“Section 230”), which generally provides immunity for website publishers from liability for third party content appearing on their platforms and the good faith removal of third party content from their platforms that they may deem obscene or offensive (even if constitutionally protected speech), since its adoption has been (and continues to be) subject to a number of challenges. The immunities conferred by Section 230 could also be narrowed or eliminated through amendment, regulatory action or judicial interpretation. In 2018, the U.S. Congress amended Section 230 to remove certain immunities and most recently, in 2020, various members of the U.S. Congress introduced bills to further limit Section 230, and a petition was filed by a Department of Commerce entity with the Federal Communications Commission to commence a rulemaking to further limit Section 230. Any future adverse changes to Section 230 could result in additional compliance costs for us and/or exposure for additional liabilities.
Because we receive, store and use a substantial amount of information received from or generated by our users and subscribers, we are also impacted by laws and regulations governing privacy, the storage, sharing, use, processing, disclosure and protection of personal data and data security, primarily in the case of our operations in the United States and the European Union and the handling of personal data of users located in the United States and the European Union. Recent examples of comprehensive regulatory initiatives in the area of privacy and data security include a comprehensive European Union privacy and data protection reform, the General Data Protection Regulation (the “GDPR”), which became effective in May 2018. The GDPR, which applies to certain companies that are organized in the European Union or otherwise provide services to (or monitor) consumers who reside in the European Union, imposes significant penalties (monetary and otherwise) for non-compliance, as well as provides a private right of action for individual claimants. The GDPR will continue to be interpreted by European Union data protection regulators, which may require us to make changes to our business practices and could generate additional risks and liabilities. The European Union is also considering an update to its Privacy and Electronic Communications Directive to impose stricter rules regarding the use of cookies.
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In addition, in October 2015, the European Court of Justice (“ECJ”) invalidated the U.S.-EU Safe Harbor framework that had been in place since 2000 for the transfer of personal data from the European Economic Area (the “EEA”) to the U.S., and on July 16, 2020, the ECJ invalidated the EU-U.S. Privacy Shield as an adequate safeguard when transferring personal data from the EEA to the U.S. These regulations continue to evolve and may ultimately require us to devote resources towards compliance and/or make changes to our business practices to ensure compliance, all of which could be costly. Also, the exit from the European Union by the United Kingdom could result in the application of new and conflicting data privacy and protection laws and standards to our operations in the United Kingdom and our handling of personal data of users located in the United Kingdom. At the same time, many jurisdictions abroad in which we do business have already or are currently considering adopting privacy and data protection laws and regulations.
Moreover, while multiple legislative proposals concerning privacy and the protection of user information are being considered by the U.S. Congress and various U.S. state legislatures, certain U.S. state legislatures have already enacted privacy legislation, one of the strictest and most comprehensive of which is the California Consumer Privacy Act of 2018, which became effective on January 1, 2020 (the “CCPA”). The CCPA provides new data privacy rights for California consumers, and restricts the ability of certain of our websites to use personal California user and subscriber information in connection with their various products, services and operations. The CCPA also provides consumers with a private right of action for security breaches, as well as provides for statutory damages. In addition, on November 3, 2020, California voters approved Proposition 24 (the “California Privacy Rights Act of 2020”), which amends certain provisions of the CCPA and becomes effects January 1, 2023, will further restrict the ability of certain of our websites to use personal California user and subscriber information in connection with their various products, services and operations and/or impose additional operational requirements on such websites. Lastly, the U.S. Federal Trade Commission has also increased its focus on privacy and data security practices, as evidenced by the first-of-its-kind, $5 billion dollar fine against a social media platform for privacy violations in 2019. As a result, we could be subject to various private and governmental claims and actions in this area.
As a provider of certain subscription-based products and services, we are also impacted by laws or regulations affecting whether and how our online businesses may periodically charge users for membership or subscription renewals. For example, the European Union Payment Services Directive, which became effective in 2018, could impact the ability of certain of our online businesses to process auto-renewal payments for, as well as offer promotional or differentiated pricing to, users who reside in the European Union. Similar laws exist in the U.S., including the federal Restore Online Shoppers Confidence Act and various U.S. state laws, and legislative and regulatory enactments or amendments are under consideration in a number of U.S. states.
We are also sensitive to the adoption of new tax laws. The European Commission and several European countries have recently adopted (or intend to adopt) proposals that would change various aspects of the current tax framework under which certain of our European online businesses are taxed, including proposals to change or impose new types of non-income taxes (including taxes based on a percentage of revenue).
In addition, in the case of certain online businesses, such as Vital Reaction, we must be compliant with U.S. Food and Drug Administration (“FDA”) regulations for claims made by supplement companies. All of our marketing materials must be in alignment with both the spirit and letter of the disclaimer, “These products/claims have not been evaluated by the FDA. These products are not intended to diagnose, treat or cure any health conditions.”
We are also subject to laws, rules and regulations governing the marketing and advertising activities of our various online businesses conducted by or through telephone, email, mobile digital devices and the Internet, including the Telephone Consumer Protection Act of 1991, the Telemarketing Sales Rule, the CAN-SPAM act and similar state laws, rules and regulations, as well as local laws, rules and regulations and relevant agency guidelines governing background screening.
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Further, all of our websites could be subject to the Americans with Disabilities Act (the “ADA”) The ADA does not explicitly address online compliance. With no specific coverage under the law, it usually falls to the courts to determine how ADA standards apply to websites—or whether they do at all.
Lastly, as a company based in the U.S. with foreign offices in various jurisdictions worldwide, we are subject to a variety of foreign laws governing the foreign operations of our various online businesses, as well as U.S. laws that restrict trade and certain practices, such as the Foreign Corrupt Practices Act.
Non-Government Regulation
From a non-Governmental standpoint, we also need to comply with policies and terms of service on various platforms, including but not limited to: Facebook, Facebook Ads, Instagram, Pinterest, Google Ads, Google Search, Twitter, TikTok, and YouTube.
Properties and Facilities
The Company is a remote company, meaning that it does not have a physical office where employees work. Our executive officers and other employees have the option of either telecommuting or working from somewhere else. We lease and maintain an office out of our chief executive officer’s residence at the Executive Centre Taipei, Level 4, Neihu New Century Building No, No. 55, Zhouzi St, Neihu District, Taipei City, 114, Taiwan (approximately $400 per month), a community and co-working space at The Mill at 1007 North Orange Street, 4th Floor Wilmington, Delaware 19801 ($75 per month) and storage space at 3002 Nelson Road, Longmont, Colorado, 80503 ($159 per month). We do not currently own any real estate. We consider our space at 1007 North Orange Street, 4th Floor Wilmington, Delaware 19801 to be our principal executive office.
Legal Proceedings
From time to time, we may be involved in various disputes and litigation matters that arise in the ordinary course of business. We are currently not a party to any material legal proceedings.
Employees
Our Company, including all its subsidiaries, has 12 full-time employees and 1 part-time employee. It also utilizes 66 full-time contractors in connection with its business operations.
Corporate History and Available Information
Onfolio Holdings Inc. was incorporated under the laws of the State of Delaware on July 20, 2020. Unless the context otherwise requires, all references to “our Company,” “we,” “our” or “us” and other similar terms means Onfolio Holdings Inc., a Delaware corporation, and our wholly owned subsidiaries.
We consider our space at 1007 North Orange Street, 4th Floor Wilmington, Delaware 19801 to be our principal executive office. The Company is a remote company, meaning that it does not have a physical office where employees work. Our executive officers and other employees have the option of either telecommuting or working from somewhere else. The Company employs workers in numerous time zones around the world. Our telephone number is (682) 990- 6920. Our website address is located at https://www.onfolio.com. The information contained on our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our securities.
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| Table of Contents |
| Name |
|
Age |
| Year First Elected Director |
| Positions/Committees |
| Independent |
| Dominic Wells |
| 40 |
| 2020 |
| Chief Executive Officer, Chief Revenue Officer, Secretary, Treasurer, Director (Chair of Board) |
| no |
| Adam Trainor |
| 41 |
|
|
| Interim Chief Financial Officer, Chief Operations Officer |
| no |
| Andrew Lawrence |
| 56 |
| 2022 |
| Director, Compensation Committee, Nominating and Corporate Governance Committee (Chair) |
| yes |
| David McKeegan |
| 50 |
| 2022 |
| Director, Compensation Committee, Audit Committee, Nominating and Corporate Governance Committee |
| yes |
| Robert J. Lipstein |
| 70 |
| 2022 |
| Director, Audit Committee (Chair) |
| yes |
| Mark N. Schwartz |
| 69 |
| 2022 |
| Director, Audit Committee, Compensation Committee (Chair) |
| yes |
Business experience of directors, executive officers, and significant employees
Dominic Wells. Dominic Wells has served as our Chief Executive Officer since August 2020 and as a Director since July 2020, and as Chief Executive Officer of Onfolio LLC since May 2019. He is responsible for developing and implementing our Company’s long term business strategy and direction. From August 2013 to April 2019, Mr. Wells was the founder and director of Digital Wells Limited (Hong Kong), where he grew the Company and the Human Proof Designs (Humanproofdesigns.com) website. Human Proof Designs is an internet marketing agency offering website creation, search engine optimization services, content marketing and content creation services, and affiliate marketing training. After founding Digital Wells Limited (Hong Kong) and growing it for 5 years, Mr. Wells exited the company in 2019. Mr. Wells’ qualifications to serve on our Board include his knowledge of our Company and his leadership at our Company. Mr. Wells completed a BA (Hons) in Media Practice & Theory from the University of Sussex, UK in 2006.
Adam Trainor. Adam Trainor has served as our Chief Operations Officer since February 2022, and as the Company’s Interim Chief Financial Officer since January 1, 2025. Prior to that Mr. Trainor served as the director of a portfolio of our Company from November 2020 to January 2022, overseeing Vital Reaction LLC, Outreachama LLC, Getmerankings LLC, alongside various content/media properties. He is responsible for executing our business strategy and managing portfolio/department leadership. Before joining Onfolio, Mr. Trainor served as the CEO of Vital Reaction LLC, from April 2019 to December 2020. Mr. Trainor is also a board certified chiropractic physician and clinical nutritionist and has worked in a variety of pain management settings, including at Walter Reed National Military Medical Center in Bethesda, MD from November 2018 to April 2019. Also, from September 2010 to January 2019, Mr. Trainor served as the founder and CEO of Thirdspace LLC, an academic tutoring agency where he ran all aspects of the agency. Mr. Trainor graduated summa cum laude with a BA in History from Boston University in 2012. He also holds a Doctorate in chiropractic medicine (2019) and Masters of Science in clinical nutrition (2018) from the Northeast College of Health Sciences.
Andrew Lawrence. A.J. Lawrence has served as a director since January 2022. Since June 2006 he has been the founder and director of the JAR Group & subsidiaries (USA), where he grew the company to reach the Inc. 500 twice and win many industry awards. The JAR Group is an internet marketing agency offering analytics, media buying, search engine optimization services, content marketing, content creation services, and affiliate program management. After founding the JAR group and growing it for 10 years, Mr. Lawrence sold the media buying, SEO, and affiliate program management divisions of the company. Mr. Lawrence’s qualifications to serve on our Board include his knowledge of our industry, multiple angel investments, and advisory roles, and his executive management experience. Mr. Lawrence completed a BA in International Relations 1991 and an MBA in International Business in 1994 from the University of South Carolina.
David McKeegan. David McKeegan has served as a Director since January 2022. Mr. McKeegan is the Co-founder and CEO of Greenback ETS which was founded in 2009 and serves thousands of U.S. expat clients around the world become and stay compliant with their U.S. taxes while overseas. He is also the Co-founder and CEO of GBS Tax and Bookkeeping, which was started in 2018 and serves entrepreneurs and startups who incorporate in the United States. Prior to Co-founding Greenback ETS, Mr. McKeegan was an Associate Director with the Bank of Scotland and worked on their syndicated loan desk for 5 years from 2005-2009. Mr. McKeegan’s qualifications to serve on our Board include his years of experience assisting corporations manage their finances, tax preparation documents and bookkeeping, along with his experience in finance and banking. Mr. McKeegan is an IRS Enrolled Agent, received his MBA from IESE in Barcelona, Spain in 2004 and his BA from Loyola College in Maryland in 2009. Mr. McKeegan also worked for JPMorgan Chase from 1997-2002.
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| Table of Contents |
Robert J. Lipstein. Robert J. Lipstein has served as a director since March 2022. In 2021, Mr. Lipstein joined the board of directors of Firstrust Bank and since 2019 has been a board member of Seacoast Banking Corporation of Florida (NASDAQ:SBCF) where he chairs its Audit Committee and is a member of the Enterprise Risk Management Committee, a member of the Directors Credit Risk Committee and a member of the Information Technology committee. Since 2017 he has been a board member of Einstein Healthcare Network. Mr. Lipstein joined the board of directors of Infrasight Software in 2020, a start-up venture that provides software that powers Hybrid IT and Multi-Cloud business decisions. Mr. Lipstein previously served as an independent board member of Ocwen Financial (NYSE: OCN), now known as Onity Group (NYSE: ONIT)), a mortgage loan servicer where he was a member of the Audit Committee and Compensation Committee from 2017 to 2020. In addition, he is a retired KPMG senior partner where he held numerous leadership roles including, Global Partner in Charge of Sarbanes Oxley Services, Global Managing Partner of IT Business Services, Partner in Charge of KPMG’s financial service practice and partner in charge of KPMG’s advisory practice for the Mid-Atlantic region. Mr. Lipstein’s qualifications to serve on our Board include his experience as a public and private company board member and as a certified public accountant, in addition to his over 40 years of diversified business experience. He is a graduate of the University of Pennsylvania Director Institute, an Emeritus member of the Weinberg Center for Corporate Governance and he earned a Bachelor’s degree in Accounting from the University of Delaware.
Mark N. Schwartz. Mark Schwartz has served as a director since March 2022. Previously, from March 2017 to January 2021, he served as member of the Board of Directors and on the Audit and Compensation Committees of The Bartell Drug Company, a $500+ million pharmacy retailer where he led planning and implementation of a successful sale to Rite Aid Drug Corporation. From January 2016 to December 2019, Mr. Schwartz served as a member of the Board of Directors of Glass-Media Inc., an ad- tech software & hardware provider for display advertising, where he advised on successful rounds of company financing. From January 2012 to December 2015, Mr. Schwartz served as a member of the Board of Directors of Specialty Commodities, Inc., a natural, organic food products company selling and processing nuts, seeds, ancient grains, and pet foods, where he consulted on positioning and strategy for sale of the company to Archer Daniels Midland. Mr. Schwartz’s qualifications to serve on our Board include his extensive background as a public and private company CEO, CFO, and board member with experience planning and implementing profit improvement and exit strategies in a variety of consumer, technology, media and healthcare companies. He has extensive mergers and acquisitions, corporate finance, IPO, financial reporting systems, budgetary oversight, and financial and corporate strategy experience to accelerate revenues and profitability. He has served on several audit and compensation committees and has extensive SEC GAAP and Sarbanes-Oxley risk management expertise. Mr. Schwartz received a BA in economics and political science from Claremont McKenna College in 1978 and an MBA from Harvard Business School in 1980. He has attended the UCLA Anderson School Executive Education program in Corporate Governance in 2015.
Each Member of our Board serves until the next annual meeting of stockholders, or until their successors have been duly elected. Each officer is elected annually by the Board and holds their office until they resign or are removed by the Board or otherwise disqualified to serve, or their successor is elected and qualified.
During the past ten years, none of our directors or executive officers have been involved in any of the proceedings described in Item 401(f) of Regulation S-K.
Director Terms; Qualifications
Members of our Board serve until the next annual meeting of stockholders, or until their successors have been duly elected.
When considering whether directors and nominees have the experience, qualifications, attributes and skills to enable the Board to satisfy its oversight responsibilities effectively in light of our Company’s business and structure, the Board focuses primarily on the industry and transactional experience, and other background, in addition to any unique skills or attributes associated with a director.
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Director or Officer Involvement in Certain Legal Proceedings
There are no material proceedings to which any director or officer, or any associate of any such director or officer, is a party that is adverse to our Company or any of our subsidiaries or has a material interest adverse to our Company or any of our subsidiaries. No director or executive officer has had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he or she was a general partner or executive officer, either at the time of the bankruptcy filing or within two (2) years prior to that time during the past ten years. No director or executive officer has been convicted of a criminal offense or is the subject of a pending criminal proceeding (excluding traffic violations and other minor offenses) during the past ten years. No director or executive officer has been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his or her involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity. No director or officer has been found by a court of competent jurisdiction in a civil action or by the SEC 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. No director or executive officer has been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity. No director or executive officer has been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Directors and Officers Liability Insurance
The Company has obtained directors’ and officers’ liability insurance insuring its directors and officers against liability for acts or omissions in their capacities as directors or officers, subject to certain exclusions. Such insurance also insures our Company against losses, which it may incur in indemnifying its officers and directors. In addition, officers and directors also have indemnification rights under applicable laws, and our Company’s certificate of incorporation and bylaws. We have also entered into separate indemnification agreements with our directors and officers.
Family Relationships
There are no family relationships between any director, executive officer or person nominated to become a director or executive officer.
Director Independence
The listing rules of The Nasdaq Stock Market LLC (“Nasdaq”) require that independent directors must comprise a majority of a listed company’s Board. In addition, the rules of Nasdaq require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and governance committees be independent. Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. Under the rules of Nasdaq, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Our Board has undertaken a review of the independence of our directors and considered whether any director has a material relationship with it that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, the Board has determined that A.J. Lawrence, David McKeegan, Robert J. Lipstein and Mark N. Schwartz are “independent” as that term is defined under the applicable rules and regulations of the SEC and the listing standards of Nasdaq. In making these determinations, our Board considered the current and prior relationships that each non-employee director has with our Company and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of our Company’s capital stock by each non-employee director, and any transactions involving them described in the section captioned “Certain Relationships And Related Person Transactions” in this prospectus.
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Board Committees
Our Company’s Board has established three standing committees: Audit, Compensation, and Nominating and Corporate Governance. Each of the committees operates pursuant to its charter. The responsibilities of each committee are described in more detail below.
Audit Committee
The Audit Committee’s purpose and powers are, to the extent permitted by law, to (a) retain, oversee and terminate, as necessary, the auditors of our Company, (b) oversee our Company’s accounting and financial reporting processes and the audit and preparation of our Company’s financial statements, (c) exercise such other powers and authority as are set forth in the charter of the audit committee of the Board, and (d) exercise such other powers and authority as shall from time to time be assigned thereto by resolution of the Board. The audit committee also has the power to investigate any matter brought to its attention within the scope of its duties. It also has the authority to retain counsel and advisors to fulfill its responsibilities and duties.
The Board has affirmatively determined that each member who serves on the audit committee meets the additional independence criteria applicable to audit committee members under SEC rules and Nasdaq listing rules. Our Board has adopted a written charter setting forth the authority and responsibilities of the Audit Committee consistent with the purposes and powers set forth above, which is available on our principal corporate website located at https://www.onfolio.com. The Board has affirmatively determined that each member of the audit committee is financially literate, and that each of Robert Lipstein and David McKeegan meet the qualifications of an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under the Securities Act. The audit committee consists of Robert Lipstein, Mark Schwartz and David McKeegan. Robert Lipstein is chair of the audit committee. We believe that the functioning of the audit committee complies with the applicable requirements of the rules and regulations of the Nasdaq listing rules and the SEC.
Compensation Committee
The Compensation Committee’s purpose and powers are, to the extent permitted by law, to (a) review and approve the compensation of the chief executive officer of our Company and such other employees of our Company as are assigned thereto by the board of directors and to make recommendations to the board of directors with respect to standards for setting compensation levels, (b) exercise such other powers and authority as are set forth in a charter of the Compensation Committee of the board of directors, and (c) exercise such other powers and authority as shall from time to time be assigned thereto by resolution of the board of directors.
The Compensation Committee also has the power to investigate any matter brought to its attention within the scope of its duties. It also has the authority to retain counsel and advisors to fulfill its responsibilities and duties.
Our Board has adopted a written charter setting forth the authority and responsibilities of the Compensation Committee consistent with the purposes and powers set forth above, which is available on our principal corporate website at onfolio.com.
The Compensation Committee consists of Mark Schwartz, David McKeegan and Andrew Lawrence. Mark Schwartz serves as chairman of the Compensation Committee. The board of directors has affirmatively determined that each member of the Compensation Committee meets the independence criteria applicable to compensation committee members under SEC rules and Nasdaq listing rules. The Company believes that the composition of the Compensation Committee meets the requirements for independence under, and the functioning of such Compensation Committee complies with, any applicable requirements of the rules and regulations of Nasdaq listing rules and the SEC.
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Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee’s purpose and powers are, to the extent permitted by law, to: (a) identify potential qualified nominees for director and recommend to the board of directors for nomination candidates for the board of directors, (b) develop our Company’s corporate governance guidelines and additional corporate governance policies, (c) exercise such other powers and authority as are set forth in a charter of the Nominating and Corporate Governance Committee of the board of directors, and (d) exercise such other powers and authority as shall from time to time be assigned thereto by resolution of the board of directors.
The Nominating and Corporate Governance Committee also has the power to investigate any matter brought to its attention within the scope of its duties. It also has the authority to retain counsel and advisors to fulfill its responsibilities and duties.
Our Board has adopted a written charter setting forth the authority and responsibilities of the Nominating and Corporate Governance Committee consistent with the purposes and powers set forth above, which is available on our principal corporate website located at https://www.onfolio.com.
The Nominating and Corporate Governance Committee consists of Andrew Lawrence and David McKeegan. Andrew Lawrence serves as chairperson. The Company’s board of directors has determined that each member of the Nominating and Corporate Governance Committee is independent within the meaning of the independent director guidelines of Nasdaq listing rules.
Compensation Committee Interlocks and Insider Participation
None of our Company’s executive officers serves, or in the past has served, as a member of the Board or its compensation Committee, or other committee serving an equivalent function, of any entity that has one or more executive officers who serve as members of our Company’s Board or its compensation committee. None of the members of our Company’s compensation committee is, or has ever been, an officer or employee of our Company.
Changes to Director Nomination Procedures
No material changes to the procedures by which our stockholders may recommend nominees to our Board of Directors has occurred since we last provided disclosure regarding these procedures.
Code of Conduct
Our Company has adopted a code of ethics and business conduct applicable to its employees, directors and officers, in accordance with applicable U.S. federal securities laws and the corporate governance rules of Nasdaq. A copy of this code of ethics and business conduct is available on our principal corporate website located at https://www.onfolio.com. Requests for a copy of the code of ethics and business conduct should be directed to Investor Relations, Onfolio Inc., 1007 North Orange Street, 4th Floor Wilmington, Delaware 19801. Any substantive amendments or waivers of the code of conduct or any similar code(s) subsequently adopted for senior financial officers may be made only by our Board and will be promptly disclosed as required by applicable U.S. federal securities laws and the corporate governance rules of Nasdaq, including by posting such information on our Company’s website or by filing a Form 8-K.
Board Leadership Structure
Our bylaws provide the Board of Directors with flexibility to combine or separate the positions of Chair of the Board of Directors and Principal Executive Officer in accordance with its determination that utilizing one or the other structure is in the best interests of our Company. Our current structure is that one person, Dominic Wells, serves as our Chief Executive Officer and Chairman of the Board of Directors. Mr. Wells serves as our Principal Executive Officer and is responsible for the overall general management of the Company and supervision of Company policies, setting the Company’s strategies, formulating and overseeing the Company’s business plan, raising capital, expanding the Company’s management team and the general promotion of the Company. He also performs certain functions related to our corporate governance, including coordinating certain board activities, setting relevant items on the agenda and ensuring adequate communication between the Board of Directors and management, which he does in conjunction with the other independent directors. Our Board of Directors has determined that presently, this leadership structure is appropriate for the size of our Company. Also, due to the smaller size of our Board of Directors, our Company does not have a lead independent director.
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Risk Oversight
The Board oversees risk management directly and through its committees associated with their respective subject matter areas. Generally, the Board oversees risks that may affect the business of the Company as a whole, including operational matters. The Audit Committee is responsible for oversight of the Company’s accounting and financial reporting processes and also discusses with management the Company’s financial statements, internal controls and other accounting and related matters. The Compensation Committee oversees certain risks related to compensation programs and the Nominating and Corporate Governance Committee oversees certain corporate governance risks. As part of their roles in overseeing risk management, these Committees periodically report to the Board regarding briefings provided by management and advisors as well as the Committees’ own analysis and conclusions regarding certain risks faced by the Company. Management is responsible for implementing the risk management strategy and developing policies, controls, processes and procedures to identify and manage risks. The interaction with management occurs not only at formal board and committee meetings, but also through periodic and other written and oral communications.
Corporate Governance Guidelines
Our Company’s Board of Directors has adopted corporate governance guidelines in accordance with the corporate governance rules of Nasdaq, which are available on our principal corporate website located at https://www.onfolio.com.
Summary Compensation Table
The compensation committee of our Board of Directors oversees, reviews and approves all compensation decisions relating to our named executive officers.
The table below summarizes all compensation awarded to, earned by, or paid to our 2024 named executive officers for the fiscal years ended December 31, 2024 and 2023. Our 2024 named executive officers are: Dominic Wells, Esbe van Heerden, and Adam Trainor.
Summary Compensation Table
The table below summarizes all compensation awarded to, earned by, or paid to our named executive officers that earned more than $100,000 for the fiscal years ended December 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
|
| Stock |
|
| Option |
|
| All Other |
|
|
|
| |||||||
| Name |
| Year(1) |
|
| Salary |
|
| Bonus |
|
| Awards(2) |
|
| Awards(2) |
|
| Compensation |
|
| Total |
| |||||||
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||||
| Dominic Wells |
| 2024 |
|
|
| 150,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 150,000 |
| |
| Chief Executive Officer, Chief Revenue Officer, Secretary, Treasurer, Director |
| 2023 |
|
|
| 150,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 150,000 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Esbe van Heerden |
| 2024 |
|
|
| 150,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 150,000 |
| |
| President and Chief Financial Officer |
| 2023 |
|
|
| 125,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| 125,000 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adam Trainor |
| 2024 |
|
| 141,000 |
|
|
| - |
|
|
| - |
|
|
| 8,867 |
|
|
| - |
|
|
| 149,867 |
| ||
| Chief Operations Officer |
| 2023 |
|
| 108,000 |
|
|
| - |
|
|
| - |
|
|
| 40,660 |
|
|
| - |
|
|
| 148,660 |
| ||
___________________________
| 1. | Esbe van Heerden was appointed as our Chief Financial Officer effective November 1, 2023, and served as our Chief Financial Officer until December 31, 2024. Adam Trainor was named as our Interim Chief Financial Officer effective January 1, 2025. |
| 2. | The grant date fair value of the stock awards and option awards computed in accordance with ASC Topic 718. |
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We grant stock awards and stock options to our executive officers based on their level of experience and contributions to our Company. The aggregate fair value of awards and options are computed in accordance with FASB ASC 718. The assumptions made in the computation may be found in Note 7 of our audited financial statements contained in our Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
At no time during the last fiscal year was any outstanding option otherwise modified or re-priced, and there was no tandem feature, reload feature, or tax-reimbursement feature associated with any of the stock options we granted to our executive officers or otherwise.
Employee, Severance, Separation and Change in Control Agreements
Dominic Wells Employment Agreement.
On August 1, 2020, our Company entered into a written employment agreement with Mr. Wells as its Chief Executive Officer providing for an annual salary of $120,000 per year. On January 1, 2022, our Company entered into a new employment agreement with Mr. Wells as its Chief Executive Officer. Pursuant to this agreement, Mr. Wells receives an annual salary of $150,000, which is paid semi-monthly in accordance with our Company’s normal payroll procedures. Effective January 1, 2025, Mr. Wells received an increase in his salary to $240,000 annually. Mr. Wells is also eligible to receive certain employee benefits and bonuses under any bonus under any bonus plan program that may be established by our Board of Directors. Mr. Wells also serves as a member of our Board for no additional compensation. In the event that Mr. Wells leaves the Company’s employment for Good Reason (as defined in his employment agreement) or if the Company terminates his employment without Cause (as defined in his employment agreement) , Mr. Wells will be entitled to receive severance in an amount equal to one day of base salary for every completed work day of employment with the Company, up to a maximum of three (3) months of base salary.
Esbe van Heerden Employment Agreement.
Our Company entered into an employment agreement dated February 1, 2022, with Ms. van Heerden as its President providing for an annual salary of $120,000 per year. On November 1, 2023, our Company entered into a new employment agreement with Ms. van Heerden as its Chief Financial Officer and President. Pursuant to the agreement, Ms. van Heerden receives an annual salary of $150,000, which is paid semi-monthly in accordance with our Company’s normal payroll procedures. Ms. van Heerden is also eligible to receive certain employee benefits and bonuses under any bonus plan program that may be established by our Board of Directors. Ms. van Heerden resigned as our Chief Financial Officer on December 31, 2024.
Adam Trainor Employment Agreement.
Our Company entered into an employment agreement dated February 1, 2022, with Mr. Trainor as its Chief Operations Officer providing for an annual salary of $96,000 per year. On January 1, 2023, Mr. Trainor received an increase to his salary to $109,000 annually, and on October 1, 2024, he received a further increase to his salary to $240,000. On January 1, 2025, our Company entered into a new employment agreement with Mr. Trainor as its Interim Chief Financial Officer and Chief Operations Officer. Pursuant to the agreement, Mr. Trainor receives an annual salary of $240,000, which is paid semi-monthly in accordance with our Company’s normal payroll procedures. Mr. Trainor is also eligible to receive certain employee benefits and bonuses under any bonus plan program that may be established by our Board of Directors. Additionally, in connection with his employment with the Company, Mr. Trainor was granted 21,000 non-qualified stock options pursuant to the Company’s 2020 Plan. The options have an exercise price of $5.95 per share. In the event that Mr. Trainor leaves the Company’s employment for Good Reason (as defined in his employment agreement) or if the Company terminates his employment without Cause (as defined in his employment agreement), Mr. Trainor will be entitled to receive severance in an amount equal to one day of base salary for every completed work day of employment with the Company, up to a maximum of three (3) months of base salary.
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Benefits and Other Compensation
We maintain broad-based benefits that are provided to all of our employees, including reimbursement of private health insurance, tech allowances, and education and professional development plans, that named executive officers participate in. Executives are eligible to participate in all of our employee benefit plans, in each case on the same terms as our other employees. No employee benefit plans are in place solely for the benefit of our executives.
Change in Control Benefits
Pursuant to the terms of our 2020 Equity Incentive Plan, our executives are entitled to certain benefits in the event of a change in control of our Company or the termination of their employment under specified circumstances, including termination following a change in control. We believe these benefits help us compete for and retain executive talent and are generally in line with severance packages offered to executives by the companies in our peer group. We also believe that these benefits would serve to minimize the distraction caused by any change in control scenario and reduce the risk that key talent would leave the Company before any such transaction closes, which could reduce the value of the Company if such transaction failed to close.
Termination
Our executives’ employment agreements shall automatically terminate upon (i) their death; (ii) their voluntarily leaving the employ of the Company; (iii) at the Company’s sole discretion, for any reason, with or without cause.
Outstanding Equity Awards at Fiscal Year-End
The table below summarizes all of the outstanding equity awards for our named executive officers as of December 31, 2024, our latest fiscal year end.
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| Option Awards |
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| Stock Awards |
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| Name |
| Number of securities underlying unexercised options(#) exercisable |
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| Number of securities underlying unexercised options(#) unexercisable |
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| Equity incentive plan awards: number of securities underlying unexercised unearned options |
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| Option exercise price |
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| Option expiration date |
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| Number of shares or units of stock that have not vested |
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| Market value of shares of units of stock that have not vested |
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| Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested |
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| Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested |
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| (#) |
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| (#) |
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| ($) |
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| (a) |
| (b) |
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| (c) |
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| (d) |
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| (e) |
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| (f) |
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| (g) |
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| (h) |
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| (i) |
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| (j) |
| |||||||||
| Dominic Wells |
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| - |
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| - |
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| - |
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| - |
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| - |
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| - |
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| - |
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| - |
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| - |
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| Esbe van Heerden |
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| - |
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|
| - |
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| - |
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|
| - |
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| - |
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| - |
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| - |
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| - |
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| - |
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| Adam Trainor |
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| 4,200 | (1) |
|
| - |
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| - |
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| 5.95 |
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| 1/1/2025 |
|
|
| - |
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| - |
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| - |
|
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| - |
| |
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| 16,800 | (2) |
|
| - |
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|
| - |
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| 5.95 |
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| 2/28/2025 |
|
|
| - |
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| - |
|
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| - |
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|
| - |
| |
|
| 1. | Vest over a period of one and a half years at the rate of 252 per month beginning on January 1, 2022. |
|
| 2. | Vest over a period of two years at the rate of 672 per month beginning on February 28, 2022. |
| 77 |
| Table of Contents |
Director Compensation
Compensation for our directors is discretionary and is reviewed from time to time by our Board of Directors. Any determinations with respect to Board compensation are made by our Board of Directors. During Fiscal year 2024, each of our independent directors who serve on our Board received a quarterly stipend of $5,000 payable in cash. Additionally, the chair of our audit committee receives an additional quarterly stipend of $2,500 payable in cash. All directors are also entitled to reimbursement for travel expenses for attending director meetings.
The following table summarizes compensation earned by our Company’s directors for the year ended December 31, 2024. All directors have been and will be reimbursed for reasonable expenses incurred in connection with attendance at meetings of the Board of Directors or other activities undertaken by them on behalf of our Company.
| Name |
| Fees earned or paid in Cash ($) |
|
| Stock awards ($) |
|
| Option awards ($) |
|
| Nonequity incentive plan compensation ($) |
|
| Nonqualified deferred compensation earnings ($) |
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| All other compensation ($) |
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| Total ($) |
| |||||||
| Dominic Wells(1) |
|
| — |
|
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| — |
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| — |
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|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
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| Andrew Lawrence |
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| 20,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 20,000 |
|
| David McKeegan |
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| 20,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 20,000 |
|
| Robert J. Lipstein |
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| 30,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 30,000 |
|
| Mark N. Schwartz |
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| 20,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 20,000 |
|
———————
| 1. | Serves as an executive officer and a director, but receives no additional compensation for serving as a director. |
Compensation Policies and Practices as They Relate to Our Risk Management
Our compensation program for employees does not create incentives for excessive risk taking by our employees or involve risks that are reasonably likely to have a material adverse effect on us. Our compensation program has the following risk-limiting characteristics:
|
| · | Our base pay consists of competitive salary rates that represent a reasonable portion of total compensation and provide a reliable level of income on a regular basis, which decreases incentive on the part of our executives to take unnecessary or imprudent risks; |
|
| · | Neither option awards nor other bonus awards are tied to formulas that could focus executive or non-executive employees on specific short-term outcomes; and |
|
| · | Option awards, generally, have multi-year vesting which aligns the long-term interests of our executive and non-executive employees with those of our stockholders and, again, discourages the taking of short-term risk at the expense of long-term performance. |
| 78 |
| Table of Contents |
Compensation Recovery (“Clawback”) Policy
We have adopted a compensation recovery policy (“clawback policy”) that applies to incentive compensation. The purpose of the clawback policy is to enable the Company to recover erroneously awarded compensation in the event that the Company is required to prepare an accounting restatement. Under the clawback policy, an accounting restatement means an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. In the clawback policy, erroneously awarded compensation generally means, in the event of an accounting restatement, the amount of incentive-based compensation previously received that exceeds the amount of incentive-based compensation that otherwise would have been received had it been determined based on the restated amounts in the accounting restatement. The clawback policy is annexed to our Company’s Annual Report on Form 10-K for the year ended December 31, 2024 as Exhibit 97.1.
Recovery of Erroneously Awarded Compensation
During the year ended December 31, 2024, the Company identified errors in its previously issued consolidated financial statements for the year ended December 31, 2023 related to the impairment of intangible assets and goodwill of certain recently acquired businesses. These errors were a result of the Company revising the estimated cash flows used in its determination of the recoverability of the impaired assets as well as the sequencing of impairment testing thereby resulting in an understatement of impairment expense for the year ended December 31, 2023 and a subsequent overstatement of amortization expense in each of the quarters for the year ended December 31, 2024. The errors noted above did not result in the 2023 financial statements being materially misstated. However, in order to correctly reflect the errors in the appropriate period, management has revised the 2023 previously issued financial statements in our Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Additional information may be found in Note 1 of our audited financial statements contained in such Annual Report. The revisions to our 2023 previously issued financial statements that were contained in our Company’s Annual Report on Form 10-K for the year ended December 31, 2024 did not impact on our executive compensation payments and, thus, no recovery was required. This was because no aspect of our executive compensation is or was performance-based and calculated based on financial results provided in our financial statements.
Equity Grant Timing
The Board and Compensation Committee does not grant equity awards to executives or directors pursuant to any predetermined schedule. The Board and Compensation Committee considers and approves interim or mid-year grants, from time to time based on business needs. The Board and Compensation Committee takes material nonpublic information into account when determining the timing and terms of equity awards and will, to the extent feasible, avoid approving grants prior to disclosure of material nonpublic information. Additionally, the Compensation Committee does not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the date of this prospectus, the stock ownership of (1) each person or group known to our Company to beneficially own 5% or more of our common stock and (2) each director and Named Executive individually, and (3) all directors and executive officers of our Company as a group. To our knowledge, except as set forth in the footnotes to this table and subject to applicable community property laws, each person named in the table below has sole voting and investment power with respect to the shares set forth opposite such person’s name. Except as otherwise indicated, the address of each of the persons in the table below is c/o Onfolio Holdings Inc., 1007 North Orange Street, 4th Floor, Wilmington, DE 19801.
| 79 |
| Table of Contents |
| Common Stock | ||||||||
| Name of Beneficial Owner |
| Number Of Shares Beneficially Owned |
|
| Percentage of Class (1)(2)(3) |
| ||
| 5% Stockholders(4) |
|
|
|
|
|
| ||
| Joel Arberman(5) |
|
| 700,000 |
|
|
| 12.5 | % |
| 6162 Dusenburg Road, Delray Beach, Florida 33484 |
|
|
|
|
|
|
|
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| Adam Garcia(6) |
|
| 291,242 |
|
|
| 5.6 | % |
| 16785 Broadwater Ave, Winter Garden, Florida 34787 |
|
|
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| Directors and Named Executive Officers |
|
|
|
|
|
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|
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| Dominic Wells(7), CEO, CRO, Director (Chair of Board) |
|
| 1,642,431 |
|
|
| 29.3 | % |
| Adam Trainor (8), Interim Chief Financial Officer, Chief Operations Officer |
|
| 200,000 |
|
|
| 3.7 | % |
| Andrew “A.J.” Lawrence(9), Director |
|
| 30,700 |
|
| * |
| |
| David McKeegan(9), Director |
|
| 30,700 |
|
| * |
| |
| Robert J. Lipstein(9), Director |
|
| 30,700 |
|
| * |
| |
| Mark Schwartz(9), Director |
|
| 30,700 |
|
| * |
| |
| All Executive Officers and Directors as a Group (6 individuals) |
|
| 1,965,231 |
|
|
| 33.1 | % |
_____________
* Less than 1.0%.
|
| 1. | Where the Number of Shares Beneficially Owned (reported in the preceding column) includes shares which may be purchased upon the exercise of outstanding stock options and warrants which are or within 60 days will become exercisable (“presently exercisable options”) the percentage of class reported in this column has been calculated assuming the exercise of such presently exercisable options. |
|
| 2. | Based on 5,127,395 shares of common stock outstanding on the Record Date. |
|
| 3. | If a person listed on this table has the right to obtain additional shares of common stock within 60 days from the Record Date, the additional shares are deemed to be outstanding for the purpose of computing the percentage of class owned by such person, but are not deemed to be outstanding for the purpose of computing the percentage of any other person. |
|
| 4. | Based solely upon a review of Schedule 13G filings with the SEC. |
|
| 5. | Includes 241,900 shares of common stock and 458,100 immediately exercisable warrants to purchase 458,100 shares of common stock. |
|
| 6. | Includes 268,597 shares of common stock and 22,645 immediately exercisable warrants to purchase 22,645 shares of common stock. |
|
| 7. | Includes 1,165,500 shares of common stock and 476,931 immediately exercisable warrants to purchase 476,931 shares of common stock. |
|
| 8. | Represents 200,000 immediately exercisable options. |
|
| 9. | Includes 700 shares of common stock and 30,000 immediately exercisable options. |
We are not aware of any arrangements that could result in a change of control.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Transactions with Related Persons
From time to time, the Company pays expenses directly on behalf of the Joint Ventures that it manages and receives funds on behalf of the joint ventures. As of December 31, 2024, 2023 and 2022 the balances due from related parties were $89,536, $93,372 and $54,858 included in current liabilities.
From time to time, the Company’s CEO paid expenses on behalf of the Company, and the Company funded certain expenses to the CEO. Additionally, the Company received its investments in Onfolio JV I, LLC, Onfolio JV II, LLC and Onfolio JV III, LLC from the CEO. As of December 31, 2024, 2023 and 2022 the Company was owed $36,994, $36,994 and $36,854 by the entities controlled by the Company’s CEO. During the year ended December 31, 2022, the Company paid the $215,000 related to the Company’s capital contribution for its equity interest in JV IV.
| 80 |
| Table of Contents |
No member of management has benefited from the transactions with related parties.
For additional information, see Note 9 – Related Party Transactions to our audited financial statements.
Policies and Procedures for Related-Party Transactions
Our Audit Committee considers and approves or disapproves any related person transaction as required by NASDAQ regulations pursuant to the provisions of the Audit Committee Charter of the Board of Directors.
Authorized and Outstanding Capital Stock
The following description of our Company’s capital stock and provisions of our amended and restated certificate of incorporation (“certificate of incorporation”) and our amended and restated bylaws (“bylaws”) are summaries and are qualified by reference to our Company’s certificate of incorporation and bylaws.
The total number of shares of all classes of capital stock that our Company is authorized to issue is 55,000,000 shares, consisting of (i) 50,000,000 shares of common stock, par value $0.001 per share (the “common stock”), and (ii) 5,000,000 shares of preferred stock, par value $0.001 per share (the “preferred stock”), of which 1,000,000 shares of preferred stock have been designated by our Board of Directors (“Board”) as series A preferred stock (the “series A preferred stock”).
As of the date of this prospectus, our Company had outstanding 5,127,395 shares of common stock and 170,460 shares of series A preferred stock.
Common Stock
The holders of our Company’s common stock are entitled to one vote per share. In addition, the holders of our Company’s common stock will be entitled to receive dividends ratably, if any, declared by our Company’s Board out of legally available funds; however, the current policy of the Board is to use all available funds and any future earnings for use in financing the growth of our business and to meet our series A preferred stock dividend obligations. We do not anticipate paying any cash dividends on our common stock for the foreseeable future. Upon liquidation, dissolution or winding-up, the holders of our Company’s common stock are entitled to share ratably in all assets that are legally available for distribution. The holders of our Company’s common stock have no pre-emptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of our Company’s common stock are subject to, and may be adversely affected by, the rights of the holders of the series A preferred stock, in addition to any other series of preferred stock which may be designated solely by action of the Board and issued in the future.
Publicly traded warrants
The following summary of certain terms and provisions of the publicly traded warrants we issued as part of our initial public offering. This summary is not complete and is subject to and qualified in its entirety by the provisions of the warrant agency agreement, which is filed as an exhibit to our Company’s Annual Report on Form 10-K for the year ended December 31, 2024. You should carefully review the terms and provisions set forth in the warrant agency agreement, including the annexes thereto, and the form of publicly traded warrant.
Outstanding. As of the date of this prospectus, we have outstanding publicly traded warrants to purchase 6,117,250 shares of common stock.
Exercisability. The publicly traded warrants are exercisable at any time after August 30, 2022, and at any time up to the date that is five (5) years after August 30, 2022. The publicly traded warrants are exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice accompanied by payment in full for the number of shares purchased upon such exercise (except in the case of a cashless exercise as discussed below).
| 81 |
| Table of Contents |
Exercise Limitation. A holder does not have the right to exercise any portion of the publicly traded warrant if the holder (together with its affiliates) would beneficially own in excess of 4.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the publicly traded warrants. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99%, provided that any increase in such percentage shall not be effective until 61 days following notice from the holder to us.
Exercise Price. The exercise price per share of common stock purchasable upon exercise of the publicly traded warrants is $5.00 per share. The exercise price is subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our common stock and also upon any distributions of assets, including cash, stock or other property to our stockholders. The publicly traded warrant exercise price is also subject to downward adjustment in the event we issue shares of common stock in a capital raising transaction at a price below the exercise price, subject to a minimum exercise price of $2.50.
Cashless Exercise. If, at any time during the term of the publicly traded warrants, the issuance of shares of common stock upon exercise of the publicly traded warrants is not covered by an effective registration statement, the holder is permitted to effect a cashless exercise of the publicly traded warrants (in whole or in part) by having the holder deliver to us a duly executed exercise notice, canceling a portion of the publicly traded warrant in payment of the purchase price payable in respect of the number of shares of common stock purchased upon such exercise.
Rights as a Stockholder. Except as otherwise provided for in the publicly traded warrants or by virtue of such holder’s ownership of shares of our common stock, the holder of a publicly traded warrant does not have the rights or privileges of a holder of our common stock, including any voting rights, until the holder exercises the warrant.
Warrant Agent; Global Certificate. The publicly traded warrants are issued in registered form under the warrant agency agreement between the warrant agent and our Company. The publicly traded warrants shall initially be represented only by one or more global warrants deposited with the warrant agent, as custodian on behalf of The Depository Trust Company (DTC) and registered in the name of Cede & Co., a nominee of DTC, or as otherwise directed by DTC. Our transfer agent, VStock Transfer LLC will serve as the warrant agent.
Governing Law. The publicly traded warrants and the warrant agency agreement are governed by Delaware law.
Placement Agent Warrants
In addition, as additional compensation for EF Hutton’s services, we agreed to issue warrants to EF Hutton or its designees to purchase 82,613 shares of our common stock at $5.50 (the “representative’s warrants”). The representative’s warrants may be exercised in whole or in part, commencing on a date which is six months from August 25, 2022 until August 25, 2027. The representative’s warrants provide for one-time demand registration rights and unlimited “piggyback” registration rights for the shares of our common stock exercisable thereunder as well as customary anti-dilution provisions (for stock dividends and splits and recapitalizations) and anti-dilution protection (adjustment in the number and price of such warrants and the shares underlying such warrants) resulting from corporate events (which would include dividends, reorganizations, mergers, etc.) and future issuance of common stock or common stock equivalents at prices (or with exercise and/or conversion prices) below the offering price as permitted under FINRA Rule 5110(g)(8)(E). The demand registration rights and piggyback registration rights will terminate on the fifth anniversary and seventh anniversary of the commencement of sales of the offering, respectively, in compliance with FINRA Rules 5110(g)(8)(C) and (D).
Series A Preferred Stock
Our series A preferred stock is senior in rank to shares of common stock with respect to dividends, liquidation and dissolution. Each share of Series A preferred stock carries an annual 12% cumulative, non-compounding dividend based on the cash amount invested into the Series A preferred stock, payable quarterly. Dividends on Series A preferred stock will be paid prior to any dividends on any other class of shares, including common stock. In the event of any liquidation, dissolution or winding up of our Company, the proceeds shall be paid as follows: (i) first, pay the purchase price plus accrued dividends, on each share of Series A preferred stock; and (ii) next, the balance of any proceeds shall be distributed pro rata to holders of common stock or other junior securities. The Series A preferred stock shall be redeemable at the option of our Company commencing any time after January 1, 2026 at a price equal to the purchase price ($25.00 per share) plus accrued dividends, on each share of Series A preferred stock.
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Except as otherwise required by law, the Series A preferred stock have no voting rights other than with respect to the following where the Series A preferred stock will vote as a separate class: (a) the creation or authorization of any securities of the Company that ranks superior to or in parity with the Series A preferred stock in rights, preferences, or privileges, (b) the amending, altering, modifying, or repealing the sections of the certificate of incorporation relating to the Series A preferred stock, (c) redeeming, purchasing, or otherwise acquiring or paying or declaring any dividend or other distribution on (or pay into or set aside for a sinking fund for any such purpose) any capital stock of the Company; provided, that this restriction shall not apply to (i) the redemption or repurchase of or the payment of dividends on Shares of Series A preferred stock, (ii) the declaration or payment of any dividend or distribution payable on the common stock in shares of common stock, or (iii) the repurchase of junior securities held by employees or consultants of the Company upon termination of their employment or services pursuant to agreements providing for such repurchase; (d) enter into, or become subject to, any agreement or instrument or other obligation which by its terms restricts the Company’s ability to perform its obligations relating to the sections of the certificate of incorporation relating to the Series A preferred stock, including the ability of the Company to pay dividends or make any redemption or other liquidation payment required hereunder; or (e) agree or commit to do any of the foregoing.
On or before 180 days following the sale of at least 600,000 shares of the Series A preferred stock, our Company shall register the Series A preferred stock by preparing and filing one registration statement, or if necessary more than one registration statement, of our Company in compliance with the Securities Act of 1933, as amended (“Securities Act”) or the Securities Exchange Act of 1934, as amended and thereafter apply to list the Series A preferred stock on a U.S. stock exchange or develop a public trading market for the Series A preferred stock by soliciting securities brokers to become market makers of the series A preferred on an established over the counter trading market, such as the OTC Markets. Our series A preferred stock became quoted and began trading on the OTCQB on October 30, 2024 under the symbol “ONFOP.”
2020 Equity Incentive Plan
On July 23, 2020, we adopted the Onfolio Holdings Inc. 2020 Equity Incentive Plan, as amended, (the “2020 Plan”), which was approved by both our Board and our stockholders. Under the 2020 Plan, our Company may grant awards to our employees, consultants and directors and such other individuals who are reasonably expected to become employees, consultants and directors. Awards that may be granted under the 2020 Plan include: incentive stock options, non- qualified stock options, stock appreciation rights, restricted awards, performance share awards, cash awards, and other equity-based awards. The aggregate number of shares of our common stock that may be issued pursuant to stock awards under our 2020 Plan is 2,600,000 shares, except at any given time, the number of shares that may be issued pursuant to the 2020 Plan cannot exceed the number of shares that is equal to 20% of our Company’s total shares of common stock outstanding at the time of any grant of awards under the 2020 Plan.
As of December 31, 2024, the Company awarded a total of 412,250 options with a weighted average exercise price of $1.02 per share, and 385,034 shares of common stock are issuable upon the exercise of outstanding stock options.
Anti-Takeover Provisions
Certain of our charter and statutory provisions could make the removal of our management and directors more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our common stock. Furthermore, the existence of the foregoing provisions, as well as the significant common stock beneficially owned by our executive officers, and certain members of our Board, could lower the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our Company, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.
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Certificate of Incorporation and Bylaws
Provisions of our certificate of incorporation and bylaws may delay or discourage transactions involving an actual or potential change in control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price of our common stock. Among other things, subject to the rights of holders of any series of preferred stock, our certificate of incorporation and bylaws:
|
| · | empower our Board to fix the number of directors of our Company solely by resolution; |
|
| · | do not allow for cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates; |
|
| · | empower our Board to fill any vacancy on our Board, whether such vacancy occurs as a result of an increase in the number of directors or otherwise; |
|
| · | provide that special meetings of our stockholders may only be called by the Board or the chair of the Board (except that stockholders may also call special meetings of our stockholders so long as such stockholders beneficially owns at least 25% of the voting power of the outstanding shares of our stock); |
|
| · | establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our stockholders; |
|
| · | provide our Board the ability to authorize undesignated preferred stock. This ability makes it possible for our Board directors to issue, without stockholder approval, preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us; |
|
| · | provide that any director or the entire Board may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least 66 2/3% in voting power of the stock of the Company entitled to vote thereon; |
|
| · | provide that our Board is expressly authorized to adopt, amend or repeal our bylaws; and |
|
| · | provide that our directors will be elected by a plurality of the votes cast in the election of directors. |
Delaware Law
Section 203 of the Delaware General Corporation Law (“DGCL”) is applicable to takeovers of certain Delaware corporations, including us. Subject to exceptions enumerated in Section 203, Section 203 provides that a corporation shall not engage in any business combination with any “interested stockholder” for a three-year period following the date that the stockholder becomes an interested stockholder unless:
|
| · | prior to that date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; |
|
| · | upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, though some shares may be excluded from the calculation; or |
|
| · | on or subsequent to that date, the business combination is approved by the board of directors of the corporation and by the affirmative votes of holders of at least two- thirds of the outstanding voting stock that is not owned by the interested stockholder. |
Except as specified in Section 203, an interested stockholder is generally defined to include any person who, together with any affiliates or associates of that person, beneficially owns, directly or indirectly, 15% or more of the outstanding voting stock of the corporation, or is an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of the corporation, any time within three years immediately prior to the relevant date. Under certain circumstances, Section 203 makes it more difficult for an interested stockholder to effect various business combinations with a corporation for a three-year period, although the stockholders may elect not to be governed by this section, by adopting an amendment to the certificate of incorporation or bylaws, effective 12 months after adoption. Our certificate of incorporation and bylaws do not opt out from the restrictions imposed under Section 203. We anticipate that the provisions of Section 203 may encourage companies interested in acquiring us to negotiate in advance with the board because the stockholder approval requirement would be avoided if a majority of the directors then in office excluding an interested stockholder approve either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder. These provisions may have the effect of deterring hostile takeovers or delaying changes in control, which could depress the market price of our common stock and deprive stockholders of opportunities to realize a premium on shares of common stock held by them.
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Contractual Provisions
Our award agreements related to our 2020 Plan may include change-in-control provisions that allow us to grant options or other awards pursuant to our 2020 Plan that may become vested immediately upon a change in control. The terms of change of control provisions contained in certain of our senior executive employee agreements may also discourage a change in control of our Company.
Our Board also has the power to adopt a stockholder rights plan that could delay or prevent a change in control of our Company even if the change in control is generally beneficial to our stockholders. These plans, sometimes called “poison pills”, are oftentimes criticized by institutional investors or their advisors and could affect our rating by such investors or advisors. If our Board adopts such a plan, it might have the effect of reducing the price that new investors are willing to pay for shares of our common stock.
Exclusive Forum Provision
Our certificate of incorporation and bylaws provide that unless our Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for:
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| · | any derivative action or proceeding brought on behalf of the Company; |
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| · | any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s stockholders; |
|
| · | any action arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws (as either may be amended from time to time); or |
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| · | any action asserting a claim governed by the internal affairs doctrine. |
Unless our Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of our Company shall be deemed to have notice of and consented to the provisions of our certificate of incorporation.
Further, if any action the subject matter of which is within the scope of the section immediately above is filed in a court other than a court located within the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce section immediately above (an “FSC Enforcement Action”) and (ii) having service of process made upon such stockholder in any such FSC Enforcement Action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.
The enforceability of similar choice of forum provisions in other companies’ bylaws and certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any action, a court could find the choice of forum provisions contained in our certificate of incorporation and bylaws to be inapplicable or unenforceable in such action.
These provisions would not apply to suits brought to enforce a duty or liability created by the Exchange Act, Securities Act or any other claim for which the federal courts have exclusive or concurrent jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in our securities shall be deemed to have notice of and consented to these provisions. Our exclusive forum provision will not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders will not be deemed to have waived our compliance with these laws, rules and regulations.
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Together, these charter, statutory and contractual provisions could make the removal of our management and directors more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our common stock. Furthermore, the existence of the foregoing provisions, as well as the significant common stock beneficially owned by our founder, executive officers, members of our Board, and others could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our Company, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.
Listing/Quotation
Our common stock and IPO warrants are listed and traded under the symbols “ONFO” and “ONFOW,” respectively, on the Nasdaq Capital Market. Our series A preferred stock is quoted on the OTCQB under the symbol “ONFOP.”
Transfer Agent and Warrant Agent
The Company’s transfer agent and warrant Agent is VStock Transfer LLC with an address of 18 Lafayette Place, Woodmere, New York, NY 11598.
Indemnification of Directors and Officers
Each of our certificate of incorporation and our bylaws provide for indemnification of our directors and officers. Our certificate of incorporation and bylaws provide that we must indemnify our directors and officers to the fullest extent permitted by the DGCL and must indemnify against all expenses, liability, and loss incurred in investigating, defending or participating in such proceedings. We have also entered into separate indemnification agreements with our directors and officers.
Insofar as indemnification for liabilities under the Securities Act may be permitted to officers, directors or persons controlling our Company pursuant to the foregoing provisions, our Company has been informed that is it is the opinion of the Securities and Exchange Commission that such indemnification is against public policy as expressed in such Securities Act and is, therefore, unenforceable.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO
NON-U.S. HOLDERS OF THE COMPANY’S COMMON STOCK
The following is a summary of the material U.S. federal income tax consequences of the ownership and disposition of our common stock acquired in this offering by a “non-U.S. holder” (as defined below), but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the United States Internal Revenue Code of 1986, as amended, or the Code, Treasury Regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof. These authorities may be changed, possibly retroactively, so as to result in U.S. federal income tax consequences different from those set forth below. We have not sought, and do not intend to seek, any ruling from the Internal Revenue Service, or IRS, with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS or a court will agree with such statements and conclusions.
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This summary is limited to non-U.S. holders that hold our common stock as a “capital asset” within the meaning of Section 1221 of the Code (generally, property held for investment). This summary also does not address the tax considerations arising under the laws of any state or local or non-U.S. jurisdiction or under U.S. federal gift and estate tax rules, or rising out of other non-income tax rules. In addition, this discussion does not address tax considerations applicable to a non-U.S. holder’s particular circumstances or to non-U.S. holders that may be subject to special tax rules, including, without limitation:
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| · | banks, insurance companies, regulated investment companies, real estate investment trusts or other financial institutions; |
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| · | persons subject to the alternative minimum tax or the tax on net investment income; |
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| · | persons subject to special tax accounting rules as a result of any item of gross income with respect to our common stock being taken into account in an applicable financial statement; |
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| · | tax-exempt organizations or governmental organizations; |
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| · | pension plans and tax-qualified retirement plans; |
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| · | partnerships or other entities or arrangements treated as partnership for U.S. federal income tax purposes (and investors therein); |
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| · | brokers or dealers in securities or currencies; |
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| · | traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; |
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| · | certain former citizens or long-term residents of the United States; |
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| · | persons who hold our common stock as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction or integrated investment; |
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| · | persons who hold or receive our common stock pursuant to the exercise of any option or otherwise as compensation; |
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| · | “qualified foreign pension funds” as defined in Section 897(l)(2) of the Code and entities all of the interests of which are held by qualified foreign pension funds; and |
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| · | persons deemed to sell our common stock under the constructive sale provisions of the Code. |
In addition, if a partnership, entity or arrangement classified as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of a partner generally will depend on the status of the partner and upon the activities of the partnership. Partnerships holding our common stock and partners in such partnerships should consult their own tax advisor regarding the tax consequences of the ownership and disposition of our common stock to them.
This summary is for informational purposes only and is not tax advice. Each non-U.S. holder is urged to consult its own tax advisor with respect to the application of the U.S. federal income tax laws to its particular situation, as well as any tax consequences of the ownership and disposition of our common stock arising under the U.S. federal gift or estate tax rules or under the laws of any state, local, non-U.S. or other taxing jurisdiction or under any applicable tax treaty.
Non-U.S. Holder Defined
For purposes of this discussion, a “non-U.S. holder” is a beneficial owner of our common stock that, for U.S. federal income tax purposes, is neither a “U.S. person” nor an entity (or arrangement) treated as a partnership. A “U.S. person” is any person that, for U.S. federal income tax purposes, is or is treated as any of the following:
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| · | an individual who is a citizen or resident of the United States; |
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| · | a corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the United States or any political subdivision thereof, or otherwise treated as such for U.S. federal income tax purposes; |
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| · | an estate whose income is subject to U.S. federal income tax regardless of its source; or |
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| · | a trust (x) whose administration is subject to the primary supervision of a U.S. court and that has one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code) who have the authority to control all substantial decisions of the trust or (y) that has made a valid election under applicable Treasury Regulations to be treated as a United States person U.S. person for U.S. federal income tax purposes. |
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Distributions
As described in the section titled “Dividend Policy,” we have never declared or paid cash dividends on our common stock, and we do not anticipate paying any dividends on our common stock following the completion of this offering. However, if we do make distributions of cash or property on our common stock to non-U.S. holders, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed both our current and our accumulated earnings and profits, the excess will first constitute a return of capital and will reduce each non-U.S. holder’s adjusted tax basis in our common stock, but not below zero. Any additional excess will then be treated as capital gain from the sale of stock, as discussed under “Gain on Taxable Disposition of Common Stock.”
Subject to the discussions below on effectively connected income, any dividend paid to a non-U.S. holder generally will be subject to U.S. federal withholding tax either at a rate of 30% of the gross amount of the dividend or such lower rate as may be specified by an applicable income tax treaty between the United States and such non-U.S. holder’s country of residence. In order to receive a reduced treaty rate, such non-U.S. holder must provide the applicable withholding agent with an IRS Form W-8BEN or W-8BEN-E or other appropriate version of IRS Form W-8 certifying qualification for the reduced treaty rate prior to payment of a dividend. A non-U.S. holder of shares of our common stock eligible for a reduced rate of U.S. federal withholding tax pursuant to an income tax treaty that does not timely furnish the required documentation may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. If such non-U.S. holder holds our common stock through a financial institution or other agent acting on the non-U.S. holder’s behalf, the non-U.S. holder will be required to provide appropriate documentation to such agent, which then will be required to provide certification to the applicable withholding agent, either directly or through other intermediaries. Each non-U.S. holder should consult its own tax advisors regarding their entitlement to benefits under any applicable income tax treaty.
Dividends paid to a non-U.S. holder that are treated as effectively connected with such non-U.S. holder’s conduct of a trade or business within the United States (and, if an applicable income tax treaty so provides, such non-U.S. holder maintains a permanent establishment or fixed base in the United States to which such dividends are attributable) are generally exempt from the 30% U.S. federal withholding tax described above. To claim this exemption, a non-U.S. holder must provide the applicable withholding agent with a properly executed IRS Form W-8ECI certifying that the dividends are effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States. Such effectively connected dividends, although not subject to U.S. federal withholding tax, generally will be subject to U.S. federal income tax on a net income basis in the same manner and at the same rates as a United States person. In addition, if a non-U.S. holder is a corporation, dividends such non-U.S. holder receives that are effectively connected with its conduct of a U.S. trade or business, as adjusted for certain items, may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable income tax treaty between the United States and such non-U.S. holder’s country of residence. Each non-U.S. holder should consult its own tax advisor regarding the tax consequences of the ownership and disposition of our common stock, including any applicable tax treaties that may provide for different rules.
Gain on Disposition of Common Stock
Subject to the discussions below under “Information Reporting and Backup Withholding” and “Foreign Account Tax Compliance Act (FATCA)”, a non-U.S. holder generally will not be required to pay U.S. federal income tax on any gain realized upon the sale, exchange, or other taxable disposition of our common stock unless:
|
| ● | the gain is effectively connected with the non-U.S. holder’s conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, the gain is attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the United States); |
|
|
|
|
|
| ● | the non-U.S. holder is a non-resident alien individual who is present in the United States for a period or periods aggregating 183 days or more during the taxable year in which the sale or disposition occurs and certain other conditions are met; or |
|
|
|
|
|
| ● | shares of our common stock constitute U.S. real property interests by reason of our status as a “United States real property holding corporation” (a USRPHC) for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding the non-U.S. holder’s disposition of, or the non-U.S. holder’s holding period for, our common stock. |
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We believe that we are not currently and will not become a USRPHC for U.S. federal income tax purposes. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property relative to the fair market value of our non-U.S. real property interests and our other business assets, there can be no assurance that we will not become a USRPHC in the future. Even if we become a USRPHC, however, as long as our common stock is “regularly traded,” as defined by applicable Treasury Regulations, on an established securities market, such common stock will be treated as U.S. real property interests only if the non-U.S. holder actually or constructively held more than five percent of our common stock at any time during the shorter of the five-year period preceding the non-U.S. holder’s disposition of, or the non-U.S. holder’s holding period for, our common stock.
A non-U.S. holder generally will be subject to U.S. federal income tax on gain described in the first bullet point above on a net income basis in the same manner and at the same rates as a United States person, and a corporate non-U.S. holder also may be subject to the branch profits tax at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty) on such effectively connected gain, as adjusted for certain items. A non-U.S. holder described in the second bullet above will be required to pay a flat 30% U.S. federal income tax (or such lower rate specified by an applicable income tax treaty) on the gain derived from the sale, exchange, or other taxable disposition, which gain may be offset by certain U.S. source capital losses of the non-U.S. holder for the year (provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses). Non-U.S. holders should consult their own tax advisors regarding any applicable income tax or other treaties that may apply and provide for different terms.
Exercise of Publicly Traded Warrants
Exercise of the publicly-traded warrants for cash by a Non-U.S. Holder will cause the Holder to become a Non-U.S. Holder of our common stock with an adjusted basis in that stock generally equal to the Non-U.S. Holder’s adjusted basis in the warrant plus the amount paid to exercise the warrant(s). No U.S. income tax or withholding tax is applicable to such exercise.
Information Reporting and Backup Withholding
Payments of dividends on our common stock may be subject to backup withholding unless the applicable withholding agent does not have actual knowledge or reason to know the holder is a U.S. person and the holder either certifies its non-U.S. status, such as by providing a valid IRS Form W-8BEN or W-8BEN-E, or otherwise establishes an exemption. However, information returns are required to be filed with the IRS in connection with any distributions on our common stock paid to the non-U.S. holder, regardless of whether such distributions constitute dividends or whether any tax was actually withheld.
Proceeds of the sale or other taxable disposition of our common stock within the United States or conducted through certain U.S.-related brokers generally will not be subject to backup withholding or information reporting if the applicable withholding agent receives the certification described above and does not have actual knowledge or reason to know that such holder is a U.S. person or the holder otherwise establishes an exemption. Proceeds of a disposition of our common stock conducted through a non-U.S. office of a non-U.S. broker generally will not be subject to backup withholding or information reporting.
Copies of information returns that are filed with the IRS may also be made available under the provisions of an applicable treaty or agreement to the tax authorities of the country in which the non-U.S. holder resides or is established.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.
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Foreign Account Tax Compliance Act (FATCA)
Withholding taxes may be imposed under Sections 1471 to 1474 of the Code and the Treasury Regulations promulgated thereunder (such Sections and applicable Treasury Regulations commonly referred to as the Foreign Account Tax Compliance Act, or FATCA), on certain types of payments made to non-U.S. financial institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends on, or (subject to the proposed Treasury Regulations discussed below) gross proceeds from the sale or other disposition of, our common stock paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined in the Code), unless (1) the foreign financial institution undertakes certain diligence and reporting obligations, (2) the non-financial foreign entity either certifies it does not have any “substantial United States owners” (as defined in the Code) or furnishes identifying information regarding each substantial United States owner, or (3) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in (1) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain “specified United States persons” or “United States owned foreign entities” (each as defined in the Code), annually report certain information about such accounts, and withhold 30% on certain payments to non-compliant foreign financial institutions and certain other account holders. Foreign entities located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules.
Under the applicable Treasury Regulations and administrative guidance, withholding under FATCA generally applies to payments of dividends on our common stock. While withholding under FATCA would have applied also to payments of gross proceeds from the sale or other disposition of stock on or after January 1, 2019, proposed Treasury Regulations eliminate FATCA withholding on payments of gross proceeds entirely. Taxpayers (including applicable withholding agents) generally may rely on these proposed Treasury Regulations until final Treasury Regulations are issued.
Prospective investors should consult their tax advisors regarding the potential application of withholding under FATCA to their investment in our common stock.
The preceding discussion of U.S. federal tax considerations is for general information only. It is not tax advice to investors in their particular circumstances. Each prospective investor should consult its own tax advisor regarding the particular U.S. federal, state and local and non-U.S. tax consequences of purchasing, holding and disposing of our common stock, including the consequences of any proposed change in applicable laws.
This prospectus relates to 6,199,863 shares of common stock issuable upon the exercise of warrants including 6,117,250 shares of common stock issuable upon exercise of the publicly-traded warrants and 82,613 shares of common stock issuable upon the exercise of the representative’s warrants. The terms of such warrants are described under “Description of Securities.”
The common stock issuable upon the exercise of the warrants will not be offered through underwriters, or brokers or dealers. We will not pay any compensation in connection with the offering of the shares upon exercise of the warrants.
The shares of common stock offered by this prospectus will be issued and sold upon the exercise of the warrants. The shares of common stock issuable upon exercise of the outstanding warrants will be listed on Nasdaq under the symbol “ONFO.” The common stock will be distributed to holders who exercise the warrants in accordance with the terms of the applicable warrant.
The validity of the common stock offered by us in this offering will be passed upon for us by David M. Bovi, P.A., Palm Beach Gardens, FL.
The financial statements of Onfolio Holdings Inc. as of December 31, 2024 and 2023 have been included in this Registration Statement and have been so included in reliance on the report of Astra Audit & Advisory LLC, an independent registered public accounting firm, (such report including an explanatory paragraph regarding our ability to continue as a going concern), given on the authority of said firm as experts in auditing and accounting.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents subsequently filed by the Registrant with the SEC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act (other than those made pursuant to Item 2.02 or Item 7.01 of Form 8-K or other information “furnished” to the SEC) prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be part hereof from the date of filing of such documents. These documents include periodic reports, such as Proxy Statements, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (other than the portions of those documents not deemed to be filed, which is deemed not to be incorporated by reference in this Registration Statement). Any statement contained in a document incorporated or deemed to be incorporated herein by reference shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement.
We will provide to each person, including any beneficial owner, to whom a prospectus is delivered a copy of any of the filings incorporated by reference at no cost, if you submit a request to us by writing or telephoning us at the following mailing address or telephone number:
Onfolio Holdings Inc.
1007 North Orange Street, 4th Floor
Wilmington, Delaware
Attn: Dominic Wells
Dom@onfolio.com
(682) 990-6920
Copies of these documents may also be accessed free of charge on our website at https://investors.onfolio.com/filings.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered hereby. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. For further information with respect to the Company and our common stock, reference is made to the registration statement and the exhibits and any schedules filed therewith.
Statements contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete and in each instance, if such contract or document is filed as an exhibit, reference is made to the copy of such contract or other document filed as an exhibit to the registration statement, each statement being qualified in all respects by such reference.
The SEC maintains a website at www.sec.gov, from which interested persons can electronically access the registration statement, including the exhibits and any schedules thereto and which contains the periodic reports, proxy and information statements and other information that we file electronically with the SEC.
We are subject to the information reporting requirements of the Exchange Act and we are required to file reports, proxy statements and other information with the SEC. These reports, proxy statements, and other information are available for inspection and copying at the SEC’s website referred to above. We also maintain a website located at https://www.onfolio.com, at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained on or accessible through our website is not a part of this prospectus, and the inclusion of our website address in this prospectus is an inactive textual reference only.
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CONSOLIDATED FINANCIAL STATEMENTS
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| F-2 |
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| F-3 |
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| F-4 |
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| F-5 |
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| F-6 |
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| F-7 |
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| F-1 |
| Table of Contents |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and
Stockholders of Onfolio Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Onfolio Holdings, Inc. (the Company) as of December 31, 2024 and 2023, and the related statements of income, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3, the Company has recurring net losses and negative cash flow from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Our opinion is not modified with respect to that matter.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
| /s/ Astra Audit & Advisory LLC |
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| We have served as the Company’s auditor since 2024. |
| Tampa, Florida |
| Firm ID 669256 |
| April 15, 2025 |
| F-2 |
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FINANCIAL STATEMENTS
Consolidated Balance Sheets
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| December 31, |
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| December 31, |
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| 2024 |
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| 2023 |
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| Assets |
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| Current Assets: |
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| Cash and cash equivalents |
| $ | 476,874 |
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| $ | 982,261 |
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| Accounts receivable, net |
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| 755,804 |
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| 90,070 |
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| Inventory |
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| 65,876 |
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| 92,637 |
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| Prepaids and other current assets |
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| 138,007 |
|
|
| 111,097 |
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| Total Current Assets |
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| 1,436,561 |
|
|
| 1,276,065 |
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|
|
|
|
|
|
|
|
|
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| Intangible assets |
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| 3,323,211 |
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|
| 1,675,480 |
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| Goodwill |
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| 4,210,557 |
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| 1,596,673 |
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| Fixed assets |
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| 5,135 |
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| - |
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| Due from related party |
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| 126,530 |
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| 150,971 |
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| Investment in unconsolidated joint ventures, cost method |
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| 213,007 |
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|
| 154,007 |
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| Investment in unconsolidated joint ventures, equity method |
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| 268,231 |
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|
| 273,042 |
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| Other assets |
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| 9,465 |
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| - |
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| Total Assets |
| $ | 9,592,697 |
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| $ | 5,126,238 |
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| Liabilities and Stockholder’s Equity |
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| Current Liabilities: |
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| Accounts payable and other current liabilities |
| $ | 969,068 |
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| $ | 493,816 |
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| Dividends payable |
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| 100,797 |
|
|
| 68,011 |
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| Notes payable - current |
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| 702,634 |
|
|
| 17,323 |
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| Notes payable – related parties, current |
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| 850,000 |
|
|
| - |
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| Contingent consideration |
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| 981,591 |
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|
| 60,000 |
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| Deferred revenue |
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| 589,913 |
|
|
| 149,965 |
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| Total Current Liabilities |
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| 4,194,003 |
|
|
| 789,115 |
|
|
|
|
|
|
|
|
|
|
|
| Notes payable |
|
| 450,000 |
|
|
| - |
|
| Notes payable – related parties |
|
| 599,000 |
|
|
| - |
|
| Total Liabilities |
|
| 5,243,003 |
|
|
| 789,115 |
|
|
|
|
|
|
|
|
|
|
|
| Commitments and Contingencies (Note 14) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stockholders’ Equity: |
|
|
|
|
|
|
|
|
| Preferred stock, $0.001 per value, 5,000,000 shares authorized |
|
|
|
|
|
|
|
|
| Series A Preferred stock, $0.001 par value, 1,000,000 shares authorized, 134,460 and 92,260 issued and outstanding at December 31, 2024 and 2023; |
|
| 134 |
|
|
| 93 |
|
| Common stock, $0.001 par value, 50,000,000 shares authorized, 5,127,395 and 5,107,395 issued and outstanding at December 31, 2024 and 2023; |
|
| 5,128 |
|
|
| 5,108 |
|
| Additional paid-in capital |
|
| 22,316,751 |
|
|
| 21,107,311 |
|
| Accumulated other comprehensive income |
|
| 68,105 |
|
|
| 182,465 |
|
| Accumulated deficit |
|
| (19,078,287 | ) |
|
| (16,957,854 | ) |
| Total Onfolio Inc. stockholders’ equity |
|
| 3,311,831 |
|
|
| 4,337,123 |
|
| Non-Controlling Interests |
|
| 1,037,863 |
|
|
| - |
|
| Total Stockholders' Equity |
|
| 4,349,694 |
|
|
| 4,337,123 |
|
|
|
|
|
|
|
|
|
|
|
| Total Liabilities and Stockholders’ Equity |
| $ | 9,592,697 |
|
| $ | 5,126,238 |
|
The accompanying notes are an integral part of these consolidated financial statements
| F-3 |
| Table of Contents |
Consolidated Statements of Operations
|
|
| For the Year Ended December 31, |
| |||||
|
|
| 2024 |
|
| 2023 |
| ||
|
|
|
|
|
|
|
| ||
| Revenue, services |
| $ | 4,660,069 |
|
| $ | 1,496,038 |
|
| Revenue, product sales |
|
| 3,202,008 |
|
|
| 3,743,948 |
|
| Total Revenue |
|
| 7,862,077 |
|
|
| 5,239,986 |
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenue, services |
|
| 2,609,061 |
|
|
| 837,888 |
|
| Cost of revenue, product sales |
|
| 708,139 |
|
|
| 1,159,267 |
|
| Total cost of revenue |
|
| 3,317,200 |
|
|
| 1,997,155 |
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
|
| 4,544,877 |
|
|
| 3,242,831 |
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses |
|
|
|
|
|
|
|
|
| Selling, general and administrative |
|
| 5,718,243 |
|
|
| 5,981,601 |
|
| Professional fees |
|
| 948,751 |
|
|
| 1,160,410 |
|
| Impairment of goodwill and intangible assets |
|
| 121,000 |
|
|
| 5,016,765 |
|
| Acquisition costs |
|
| 264,731 |
|
|
| 326,899 |
|
| Total operating expenses |
|
| 7,052,725 |
|
|
| 12,485,675 |
|
|
|
|
|
|
|
|
|
|
|
| Loss from operations |
|
| (2,507,848 | ) |
|
| (9,242,844 | ) |
|
|
|
|
|
|
|
|
|
|
| Other income (expense) |
|
|
|
|
|
|
|
|
| Equity method income |
|
| (4,812 | ) |
|
| 13,190 |
|
| Dividend income |
|
| 12,157 |
|
|
| 1,610 |
|
| Interest income (expense), net |
|
| (101,667 | ) |
|
| 75,041 |
|
| Other income |
|
| 6,183 |
|
|
| 2,937 |
|
| Change in fair value of contingent consideration |
|
| 368,464 |
|
|
| - |
|
| Gain on sale of subsidiary |
|
| 453,581 |
|
|
| - |
|
| Total other income |
|
| 733,906 |
|
|
| 92,778 |
|
|
|
|
|
|
|
|
|
|
|
| Loss before income taxes |
|
| (1,773,942 | ) |
|
| (9,150,066 | ) |
|
|
|
|
|
|
|
|
|
|
| Income tax (provision) benefit |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
| (1,773,942 | ) |
|
| (9,150,066 | ) |
| Net loss attributable to noncontrolling interest |
|
| 7,737 |
|
|
| - |
|
| Net loss attributable to Onfolio Holdings Inc. |
|
| (1,766,205 | ) |
|
| (9,150,066 | ) |
|
|
|
|
|
|
|
|
|
|
| Preferred Dividends |
|
| (354,228 | ) |
|
| (227,298 | ) |
| Net loss to common shareholders |
| $ | (2,120,433 | ) |
| $ | (9,377,364 | ) |
|
|
|
|
|
|
|
|
|
|
| Net loss per common shareholder |
|
|
|
|
|
|
|
|
| Basic and diluted |
| $ | (0.41 | ) |
| $ | (1.84 | ) |
|
|
|
|
|
|
|
|
|
|
| Weighted average shares outstanding |
|
|
|
|
|
|
|
|
| Basic and diluted |
|
| 5,117,941 |
|
|
| 5,107,395 |
|
The accompanying notes are an integral part of these consolidated financial statements
| F-4 |
| Table of Contents |
Consolidated Statements of Stockholders' Equity
For the Years Ended December 31, 2024 and 2023
|
|
| Preferred Stock, $0.001 Par value |
|
| Common Stock, $0.001 Par Value |
|
| Additional Paid-In |
|
| Accumulated |
|
| Accumulated Other Comprehensive |
|
| Non Controlling |
|
| Total Stockholders' |
| |||||||||||||||
|
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Income |
|
| Interest |
|
| Equity |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
| Balance, December 31, 2022 |
|
| 69,660 |
|
| $ | 70 |
|
|
| 5,107,395 |
|
| $ | 5,108 |
|
| $ | 19,950,776 |
|
| $ | (7,580,490 | ) |
| $ | 96,971 |
|
| $ | - |
|
| $ | 12,472,435 |
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| Sale of preferred stock for cash |
|
| 22,600 |
|
|
| 23 |
|
|
| - |
|
|
| - |
|
|
| 564,977 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 565,000 |
|
| Stock-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 591,558 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 591,558 |
|
| Preferred dividends |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (227,298 | ) |
|
| - |
|
|
| - |
|
|
| (227,298 | ) |
| Foreign currency translation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 85,494 |
|
|
| - |
|
|
| 85,494 |
|
| Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (9,150,066 | ) |
|
| - |
|
|
|
|
|
|
| (9,150,066 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, December 31, 2023 |
|
| 92,260 |
|
|
| 93 |
|
|
| 5,107,395 |
|
|
| 5,108 |
|
|
| 21,107,311 |
|
|
| (16,957,854 | ) |
|
| 182,465 |
|
|
| - |
|
|
| 4,337,123 |
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| Acquisition of Business |
|
| 41,400 |
|
|
| 41 |
|
|
| - |
|
|
| - |
|
|
| 1,094,959 |
|
|
| - |
|
|
| - |
|
|
| 1,066,000 |
|
|
| 2,161,000 |
|
| Sale of preferred stock for cash |
|
| 800 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 20,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 20,000 |
|
| Stock-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 56,887 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 56,887 |
|
| Shareholder Contributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 24,654 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 24,654 |
|
| Common stock issued for exercise of options |
|
| - |
|
|
| - |
|
|
| 20,000 |
|
|
| 20 |
|
|
| 12,940 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 12,960 |
|
| Preferred dividends |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (354,228 | ) |
|
| - |
|
|
| - |
|
|
| (354,228 | ) |
| Foreign currency translation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (114,360 | ) |
|
|
|
|
|
| (114,360 | ) |
| Distribution to non-controlling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (20,400 | ) |
|
| (20,400 | ) |
| Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,766,205 | ) |
|
| - |
|
|
| (7,737 | ) |
|
| (1,773,942 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, December 31, 2024 |
|
| 134,460 |
|
| $ | 134 |
|
|
| 5,127,395 |
|
| $ | 5,128 |
|
| $ | 22,316,751 |
|
| $ | (19,078,287 | ) |
| $ | 68,105 |
|
| $ | 1,037,863 |
|
| $ | 4,349,694 |
|
The accompanying notes are an integral part of these consolidated financial statements
| F-5 |
| Table of Contents |
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2024 and 2023
|
|
| 2024 |
|
| 2023 |
| ||
|
|
|
|
|
|
|
| ||
| Cash Flows from Operating Activities |
|
|
|
|
|
| ||
| Net loss |
| $ | (1,773,942 | ) |
| $ | (9,150,066 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
| Stock-based compensation expense |
|
| 56,887 |
|
|
| 591,558 |
|
| Equity method (income) loss |
|
| 4,812 |
|
|
| (13,190 | ) |
| Dividends received from equity method investment |
|
| - |
|
|
| 20,474 |
|
| Change in fair value of contingent consideration |
|
| (368,464 | ) |
|
| - |
|
| Gain on sale of subsidiary |
|
| (453,581 | ) |
|
| - |
|
| Amortization of intangible assets |
|
| 906,737 |
|
|
| 680,693 |
|
| Impairment of intangible assets |
|
| 121,000 |
|
|
| 5,016,765 |
|
| Net change in: |
|
|
|
|
|
|
|
|
| Accounts receivable |
|
| (282,002 | ) |
|
| 47,528 |
|
| Inventory |
|
| 26,761 |
|
|
| 12,492 |
|
| Prepaids and other current assets |
|
| 4,891 |
|
|
| 101,083 |
|
| Accounts payable and other current liabilities |
|
| 477,247 |
|
|
| (56,638 | ) |
| Due to joint ventures |
|
| 24,441 |
|
|
| (39,251 | ) |
| Deferred revenue |
|
| 86,850 |
|
|
| 36,714 |
|
| Net cash used in operating activities |
|
| (1,168,363 | ) |
|
| (2,751,838 | ) |
|
|
|
|
|
|
|
|
|
|
| Cash Flows from Investing Activities |
|
|
|
|
|
|
|
|
| Proceeds from sale of subsidiary |
|
| 780,000 |
|
|
| - |
|
| Cash paid to acquire businesses |
|
| (255,000 | ) |
|
| (850,000 | ) |
| Investments in joint ventures |
|
| (59,000 | ) |
|
| - |
|
| Investments in other assets |
|
| (15,000 | ) |
|
| - |
|
| Net cash provided by (used in) investing activities |
|
| 451,000 |
|
|
| (850,000 | ) |
|
|
|
|
|
|
|
|
|
|
| Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
| Proceeds from exercise of common stock options |
|
| 12,960 |
|
|
| - |
|
| Proceeds from sale of Series A preferred stock |
|
| 20,000 |
|
|
| 565,000 |
|
| Payments of preferred dividends |
|
| (321,442 | ) |
|
| (213,691 | ) |
| Distributions to non-controlling interest holders |
|
| (20,400 | ) |
|
| - |
|
| Payments on acquisition note payable |
|
| - |
|
|
| (2,439,000 | ) |
| Proceeds from notes payable |
|
| 881,650 |
|
|
| - |
|
| Payments on note payables |
|
| (386,339 | ) |
|
| (68,959 | ) |
| Proceeds from notes payable – related parties |
|
| 200,000 |
|
|
| - |
|
| Payments on note payables – related parties |
|
| (1,000 | ) |
|
| - |
|
| Payments on contingent consideration |
|
| (59,093 | ) |
|
| - |
|
| Net cash provided by (used in) financing activities |
|
| 326,336 |
|
|
| (2,156,650 | ) |
|
|
|
|
|
|
|
|
|
|
| Effect of foreign currency translation |
|
| (114,360 | ) |
|
| 39,627 |
|
|
|
|
|
|
|
|
|
|
|
| Net Change in Cash |
|
| (505,387 | ) |
|
| (5,718,861 | ) |
| Cash, Beginning of Period |
|
| 982,261 |
|
|
| 6,701,122 |
|
|
|
|
|
|
|
|
|
|
|
| Cash, End of Period |
|
| 476,874 |
|
| $ | 982,261 |
|
|
|
|
|
|
|
|
|
|
|
| Cash Paid For: |
|
|
|
|
|
|
|
|
| Income Taxes |
| $ | - |
|
| $ | - |
|
| Interest |
| $ | 101,667 |
|
| $ | 68,938 |
|
|
|
|
|
|
|
|
|
|
|
| Supplemental Non-cash Disclosures |
|
|
|
|
|
|
|
|
| Promissory notes issued for acquisitions |
| $ | 1,890,000 |
|
| $ | - |
|
| Preferred stock issued for acquisitions |
| $ | 1,035,000 |
|
| $ | - |
|
| Contingent consideration issued for acquisition |
| $ | 1,349,148 |
|
| $ | - |
|
| Common stock options issued for acquisition |
| $ | 60,000 |
|
| $ | - |
|
| Non-controlling interest issued for acquisitions |
| $ | 1,066,000 |
|
| $ | - |
|
The accompanying notes are an integral part of these consolidated financial statements
| F-6 |
| Table of Contents |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
NOTE 1 – NATURE OF BUSINESS AND ORGANIZATION
Onfolio Holdings, Inc. (“Company”) was incorporated on July 20, 2020 under the laws of Delaware to acquire and development high-growth and profitable internet businesses. The Company primarily earns revenue through website management, advertising and content placement on its online businesses, and product sales on certain sites. The Company owns multiple online businesses and manages online businesses on behalf of certain unconsolidated entities in which it holds equity interests. As described in “Note 4 –Segments Information”, we operate in two business segments: Business to Business (“B2B”) and Business to Consumer (“B2C).
Revision of Previously issued Consolidated Financial Statements
During the year ended December 31, 2024, the Company identified errors in its previously issued consolidated financial statements for the year ended December 31, 2023 related to the impairment of intangible assets and goodwill of certain recently acquired businesses. These errors were a result of the Company revising the estimated cash flows used in its determination of the recoverability of the impaired assets as well as the sequencing of impairment testing thereby resulting in an understatement of impairment expense for the year ended December 31, 2023 and a subsequent overstatement of amortization expense in each of the quarters for the year ended December 31, 2024.
The errors noted above did not result in the 2023 financial statements being materially misstated. However, in order to correctly reflect the errors in the appropriate period, management has revised the 2023 previously issued financial statements in this form 10-K.
The following table presents the effects of the Revision Adjustments on the Company’s consolidated balance sheet as of December 31, 2023:
|
|
| Balance as of December 31, 2023 |
| |||||||||
|
|
| As Reported |
|
| Adjustments |
|
| As Revised |
| |||
|
|
|
|
|
|
|
|
|
|
| |||
| Intangible Assets |
| $ | 3,110,204 |
|
| $ | (1,434,724 | ) |
| $ | 1,675,480 |
|
| Goodwill |
| $ | 1,167,194 |
|
| $ | 429,479 |
|
| $ | 1,596,673 |
|
| Total Assets |
| $ | 6,131,483 |
|
| $ | (1,005,245 | ) |
| $ | 5,126,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated deficit |
| $ | (15,952,609 | ) |
| $ | (1,005,245 | ) |
| $ | (16,957,854 | ) |
| Stockholders' deficit |
| $ | 5,342,368 |
|
| $ | (1,005,245 | ) |
| $ | 4,337,123 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total liabilities and stockholders' deficit |
| $ | 6,131,483 |
|
| $ | (1,005,245 | ) |
| $ | 5,126,238 |
|
The following table presents the effects of the Revision Adjustments on the Company’s consolidated statement of operations for the year ended December 31, 2023:
|
|
| For the Year Ended December 31, 2023 |
| |||||||||
|
|
| As Reported |
|
| Adjustments |
|
| As Revised |
| |||
|
|
|
|
|
|
|
|
|
|
| |||
| Selling, general and administrative |
| $ | 6,040,688 |
|
| $ | (59,087 | ) |
| $ | 5,981,601 |
|
| Impairment of goodwill and intangible assets |
| $ | 3,952,433 |
|
| $ | 1,064,332 |
|
| $ | 5,016,765 |
|
| Total operating expenses |
| $ | 11,480,430 |
|
| $ | 1,005,245 |
|
| $ | 12,485,675 |
|
| Loss from operations |
| $ | (8,237,599 | ) |
| $ | (1,005,245 | ) |
| $ | (9,242,844 | ) |
| Loss before income taxes |
| $ | (8,144,821 | ) |
| $ | (1,005,245 | ) |
| $ | (9,150,066 | ) |
| Net loss |
| $ | (8,144,821 | ) |
| $ | (1,005,245 | ) |
| $ | (9,150,066 | ) |
| F-7 |
| Table of Contents |
The following table presents the effects of the Revision Adjustments on the Company’s consolidated statement of changes in stockholders’ equity for the year ended December 31, 2023:
|
|
| For the Year Ended December 31, 2023 |
| |||||||||
|
|
| As Reported |
|
| Adjustments |
|
| As Revised |
| |||
|
|
|
|
|
|
|
|
|
|
| |||
| Net loss |
| $ | (8,144,821 | ) |
| $ | (1,005,245 | ) |
| $ | (9,150,066 | ) |
The following table presents the effects of the Revision Adjustments on the Company’s consolidated statement of cash flows for the year ended December 31, 2023:
| Statement of Cash Flow | ||||||||||||
|
|
| For the Year Ended December 31, 2023 |
| |||||||||
|
|
| As Reported |
|
| Adjustments |
|
| As Revised |
| |||
| Net loss |
| $ | (8,144,821 | ) |
| $ | (1,005,245 | ) |
| $ | (9,150,066 | ) |
| Amortization of intangible assets |
| $ | 739,780 |
|
| $ | (59,087 | ) |
| $ | 680,693 |
|
| Impairment of goodwill and intangible assets |
| $ | 3,952,433 |
|
| $ | 1,064,332 |
|
| $ | 5,016,765 |
|
The following tables present the effects of the Revision Adjustments described above on the Company’s unaudited interim condensed consolidated financial statements for the periods indicated.
The following tables present the effects of the Revision Adjustments on the Company’s unaudited interim condensed consolidated balance sheets as of the dates indicated:
|
|
| Balance as of March 31, 2024 (unaudited) |
| |||||||||
|
|
| As Reported |
|
| Adjustments |
|
| As Revised |
| |||
|
|
|
|
|
|
|
|
|
|
| |||
| Intangible Assets, net |
| $ | 4,060,049 |
|
| $ | (1,282,052 | ) |
| $ | 2,777,997 |
|
| Goodwill |
| $ | 3,095,937 |
|
| $ | 432,202 |
|
| $ | 3,528,139 |
|
| Total Assets |
| $ | 8,673,768 |
|
| $ | (849,850 | ) |
| $ | 7,823,918 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated deficit |
| $ | (16,664,087 | ) |
| $ | (849,850 | ) |
| $ | (17,513,937 | ) |
| Total Onfolio Inc. stockholder's equity |
| $ | 5,104,643 |
|
| $ | (849,850 | ) |
| $ | 4,254,793 |
|
| Stockholders' deficit |
| $ | 5,229,979 |
|
| $ | (849,850 | ) |
| $ | 4,380,129 |
|
| Total liabilities and stockholders' deficit |
| $ | 8,673,768 |
|
| $ | (849,850 | ) |
| $ | 7,823,918 |
|
|
|
| Balance as of June 30, 2024 (unaudited) |
| |||||||||
|
|
| As Reported |
|
| Adjustments |
|
| As Revised |
| |||
|
|
|
|
|
|
|
|
|
|
| |||
| Intangible Assets, net |
| $ | 4,397,519 |
|
| $ | (1,129,358 | ) |
| $ | 3,268,161 |
|
| Goodwill |
| $ | 3,095,937 |
|
| $ | 432,202 |
|
| $ | 3,528,139 |
|
| Total Assets |
| $ | 8,908,755 |
|
| $ | (697,156 | ) |
| $ | 8,211,599 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated deficit |
| $ | (17,529,038 | ) |
| $ | (697,156 | ) |
| $ | (18,226,194 | ) |
| Total Onfolio Inc. stockholder's equity |
| $ | 4,482,990 |
|
| $ | (697,156 | ) |
| $ | 3,785,834 |
|
| Stockholders' deficit |
| $ | 4,803,472 |
|
| $ | (697,156 | ) |
| $ | 4,106,316 |
|
| Total liabilities and stockholders' deficit |
| $ | 8,908,755 |
|
| $ | (697,156 | ) |
| $ | 8,211,599 |
|
| F-8 |
| Table of Contents |
|
|
| Balance as of September 30, 2024 (unaudited) |
| |||||||||
|
|
| As Reported |
|
| Adjustments |
|
| As Revised |
| |||
|
|
|
|
|
|
|
|
|
|
| |||
| Intangible Assets, net |
| $ | 4,069,795 |
|
| $ | (1,034,303 | ) |
| $ | 3,035,492 |
|
| Goodwill |
| $ | 3,112,987 |
|
| $ | 432,202 |
|
| $ | 3,545,189 |
|
| Total Assets |
| $ | 8,575,151 |
|
| $ | (602,101 | ) |
| $ | 7,973,050 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated deficit |
| $ | (18,106,474 | ) |
| $ | (602,101 | ) |
| $ | (18,708,575 | ) |
| Total Onfolio Inc. stockholder's equity |
| $ | 3,881,650 |
|
| $ | (602,101 | ) |
| $ | 3,279,549 |
|
| Stockholders' deficit |
| $ | 4,186,289 |
|
| $ | (602,101 | ) |
| $ | 3,584,188 |
|
| Total liabilities and stockholders' deficit |
| $ | 8,575,151 |
|
| $ | (602,101 | ) |
| $ | 7,973,050 |
|
The following tables present the effects of the Revision Adjustments on the Company’s unaudited interim condensed consolidated statements of operations for the periods indicated:
|
|
| For the Three Months Ended March 31, 2024 (unaudited) |
| |||||||||
|
|
| As Reported |
|
| Adjustments |
|
| As Revised |
| |||
| Operating expenses: |
|
|
|
|
|
|
|
|
| |||
| Selling, General and administrative |
| $ | 1,337,855 |
|
| $ | (152,671 | ) |
| $ | 1,185,184 |
|
| Total operating expenses |
| $ | 1,612,386 |
|
| $ | (152,671 | ) |
| $ | 1,459,715 |
|
| Loss from operations |
| $ | (608,050 | ) |
| $ | 152,671 |
|
| $ | (455,379 | ) |
| Loss before income taxes |
| $ | (630,497 | ) |
| $ | 152,671 |
|
| $ | (477,826 | ) |
| Net loss |
| $ | (630,497 | ) |
| $ | 152,671 |
|
| $ | (477,826 | ) |
| Net loss attributable to Onfolio Holdings |
| $ | (629,833 | ) |
| $ | 152,671 |
|
| $ | (477,162 | ) |
| Net loss to common shareholders |
| $ | (711,478 | ) |
| $ | 152,671 |
|
| $ | (558,807 | ) |
| Loss per common share - basic and diluted |
| $ | (0.14 | ) |
| $ | 0.03 |
|
| $ | (0.11 | ) |
| Weighted average shares outstanding - basic and diluted |
|
| 5,107,395 |
|
|
|
|
|
|
| 5,107,395 |
|
|
|
| For the Three Months Ended June 30, 2024 (unaudited) |
|
| For the Six Months Ended June 30, 2024 (unaudited) |
| ||||||||||||||||||
|
|
| As Previously Stated |
|
| Restatement Adjustments |
|
| As Restated |
|
| As Previously Stated |
|
| Restatement Adjustments |
|
| As Restated |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| Selling, General and administrative |
| $ | 1,504,349 |
|
| $ | (152,694 | ) |
| $ | 1,351,655 |
|
| $ | 2,842,204 |
|
| $ | (305,365 | ) |
| $ | 2,536,839 |
|
| Total operating expenses |
| $ | 1,734,550 |
|
| $ | (152,694 | ) |
| $ | 1,581,856 |
|
| $ | 3,346,936 |
|
| $ | (305,365 | ) |
| $ | 3,041,571 |
|
| Loss from operations |
| $ | (759,119 | ) |
| $ | 152,694 |
|
| $ | (606,425 | ) |
| $ | (1,367,169 | ) |
| $ | 305,365 |
|
| $ | (1,061,804 | ) |
| Loss before income taxes |
| $ | (781,737 | ) |
| $ | 152,694 |
|
| $ | (629,043 | ) |
| $ | (1,412,234 | ) |
| $ | 305,365 |
|
| $ | (1,106,869 | ) |
| Net loss |
| $ | (781,737 | ) |
| $ | 152,694 |
|
| $ | (629,043 | ) |
| $ | (1,412,234 | ) |
| $ | 305,365 |
|
| $ | (1,106,869 | ) |
| Net loss attributable to Onfolio Holdings |
| $ | (780,483 | ) |
| $ | 152,694 |
|
| $ | (627,789 | ) |
|
| (1,410,316 | ) |
|
| 305,365 |
|
|
| (1,104,951 | ) |
| Net loss to common shareholders |
| $ | (864,951 | ) |
| $ | 152,694 |
|
| $ | (712,257 | ) |
|
| (1,576,429 | ) |
|
| 305,365 |
|
|
| (1,271,064 | ) |
| Loss per common share - basic and diluted |
| $ | (0.17 | ) |
| $ | 0.03 |
|
| $ | (0.14 | ) |
| $ | (0.31 | ) |
| $ | 0.06 |
|
| $ | (0.25 | ) |
| Weighted average shares outstanding - basic and diluted |
|
| 5,109,373 |
|
|
|
|
|
|
| 5,109,373 |
|
|
| 5,108,384 |
|
|
|
|
|
|
| 5,108,384 |
|
| F-9 |
| Table of Contents |
|
|
| For the Three Months Ended September 30, 2024 |
|
| For the Nine Months Ended September 30, 2024 |
| ||||||||||||||||||
|
|
| As Previously Stated |
|
| Restatement Adjustments |
|
| As Restated |
|
| As Previously Stated |
|
| Restatement Adjustments |
|
| As Restated |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| Selling, General and administrative |
| $ | 1,473,885 |
|
| $ | (154,142 | ) |
| $ | 1,319,743 |
|
| $ | 4,316,089 |
|
| $ | (459,507 | ) |
| $ | 3,856,582 |
|
| Total operating expenses |
| $ | 1,691,153 |
|
| $ | (154,142 | ) |
| $ | 1,537,011 |
|
| $ | 5,038,089 |
|
| $ | (459,507 | ) |
| $ | 4,578,582 |
|
| Loss from operations |
| $ | (485,478 | ) |
| $ | 154,142 |
|
| $ | (331,336 | ) |
| $ | (1,852,647 | ) |
| $ | 459,507 |
|
| $ | (1,393,140 | ) |
| Loss before income taxes |
| $ | (497,759 | ) |
| $ | 154,142 |
|
| $ | (343,617 | ) |
| $ | (1,909,993 | ) |
| $ | 459,507 |
|
| $ | (1,450,486 | ) |
| Net loss |
| $ | (497,759 | ) |
| $ | 154,142 |
|
| $ | (343,617 | ) |
| $ | (1,909,993 | ) |
| $ | 459,507 |
|
| $ | (1,450,486 | ) |
| Net loss attributable to Onfolio Holdings |
| $ | (489,716 | ) |
| $ | 154,142 |
|
| $ | (335,574 | ) |
|
| (1,900,032 | ) |
|
| 459,507 |
|
|
| (1,440,525 | ) |
| Net loss to common shareholders |
| $ | (577,436 | ) |
| $ | 154,142 |
|
| $ | (423,294 | ) |
|
| (2,153,865 | ) |
|
| 459,507 |
|
|
| (1,694,358 | ) |
| Loss per common share - basic and diluted |
| $ | (0.11 | ) |
| $ | 0.03 |
|
| $ | (0.08 | ) |
| $ | (0.42 | ) |
| $ | 0.09 |
|
| $ | (0.33 | ) |
| Weighted average shares outstanding - basic and diluted |
|
| 5,127,395 |
|
|
|
|
|
|
| 5,127,395 |
|
|
| 5,114,767 |
|
|
|
|
|
|
| 5,114,767 |
|
The following tables present the effects of the Revision Adjustments on the Company’s unaudited interim condensed consolidated statements of changes in stockholders’ equity for the periods indicated:
|
|
| For the Three Months March 31, 2024 (unaudited) |
| |||||||||
|
|
| As Previously Stated |
|
| Restatement Adjustments |
|
| As Restated |
| |||
|
|
|
|
|
|
|
|
|
|
| |||
| Net loss |
| $ | (630,497 | ) |
| $ | 152,671 |
|
| $ | (477,826 | ) |
| Accumulated deficit |
| $ | (16,664,087 | ) |
| $ | (849,850 | ) |
| $ | (17,513,937 | ) |
|
|
| For the Three Months June 30, 2024 (unaudited) |
| |||||||||
|
|
| As Previously Stated |
|
| Restatement Adjustments |
|
| As Restated |
| |||
|
|
|
|
|
|
|
|
|
|
| |||
| Net loss |
| $ | (781,737 | ) |
| $ | 152,694 |
|
| $ | (629,043 | ) |
| Accumulated deficit |
| $ | (17,529,038 | ) |
| $ | (697,156 | ) |
| $ | (18,226,194 | ) |
|
|
| For the Three Months September 30, 2024 (unaudited) |
| |||||||||
|
|
| As Previously Stated |
|
| Restatement Adjustments |
|
| As Restated |
| |||
|
|
|
|
|
|
|
|
|
|
| |||
| Net loss |
| $ | (497,759 | ) |
| $ | 154,142 |
|
| $ | (343,617 | ) |
| Accumulated deficit |
| $ | (18,106,474 | ) |
| $ | (602,101 | ) |
| $ | (18,708,575 | ) |
The following tables present the effects of the Revision Adjustments on the Company’s unaudited interim condensed consolidated statements of cash flows for the periods indicated:
|
|
| For the Three Months Ended March 31, 2024 (unaudited) |
| |||||||||
|
|
| As Previously Stated |
|
| Restatement Adjustments |
|
| As Restated |
| |||
| Net loss |
| $ | (630,497 | ) |
| $ | 152,671 |
|
| $ | (477,826 | ) |
| Amortization of intangible assets |
| $ | 277,890 |
|
| $ | (152,671 | ) |
| $ | 125,219 |
|
| Net cash provided by (used in) operating activities |
| $ | (431,007 | ) |
| $ | - |
|
| $ | (431,007 | ) |
|
|
| For the Six Months Ended June 30, 2024 (unaudited) |
| |||||||||
|
|
| As Previously Stated |
|
| Restatement Adjustments |
|
| As Restated |
| |||
| Net loss |
| $ | (1,412,234 | ) |
| $ | 305,365 |
|
| $ | (1,106,869 | ) |
| Amortization of intangible assets |
| $ | 555,802 |
|
| $ | (305,365 | ) |
| $ | 250,437 |
|
| Net cash provided by (used in) operating activities |
| $ | (763,747 | ) |
| $ | - |
|
| $ | (763,747 | ) |
|
|
| For the Nine Months September 30, 2024 (unaudited) |
| |||||||||
|
|
| As Previously Stated |
|
| Restatement Adjustments |
|
| As Restated |
| |||
| Net loss |
| $ | (1,909,993 | ) |
| $ | 459,507 |
|
| $ | (1,450,486 | ) |
| Amortization of intangible assets |
| $ | 891,288 |
|
| $ | (459,507 | ) |
| $ | 431,781 |
|
| Net cash provided by (used in) operating activities |
| $ | (696,715 | ) |
| $ | - |
|
| $ | (696,715 | ) |
| F-10 |
| Table of Contents |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). The Company’s fiscal year end is December 31.
The consolidated financial statements of the Company include the accounts of its wholly owned subsidiaries and other controlled entities. The Company’s wholly-owned subsidiaries are Onfolio LLC, Vital Reaction, LLC, Mighty Deals LLC, Onfolio Assets, LLC, Onfolio Management, LLC, WP Folio, LLC, Proofread Anywhere, LLC, Contentellect, LLC, SEO Butler Limited, Eastern Standard LLC, and DealPipe, LLC. The Company also maintains majority ownership in DDS Rank, LLC, RevenueZen, LLC, and Eastern Standard which are owned 66%, 88%, and 69% respectively, by the Company as of December 31, 2024. All intercompany transactions and balances have been eliminated in consolidation.
Foreign Currency Translation Gains (Losses)
The Company, and the majority of its subsidiaries, maintain their accounting records in U.S. Dollars. The Company’s operating subsidiary, SEO Butler, is located in the United Kingdom and maintains its accounting records in Great Britain Pounds, which is its functional currency. Assets and liabilities of the subsidiary are translated into U.S. dollars at exchange rates at the balance sheet date, equity accounts are translated at historical exchange rate and revenues and expenses are translated by using the average exchange rates for the period. Translation adjustments are reported as a separate component of other comprehensive income (loss) in the consolidated statements of operations and comprehensive loss. Foreign currency denominated transactions are translated at exchange rates approximating those in effect at the transaction dates.
Investment in Unconsolidated Entities – Equity and Cost Method Investments
We account for our interests in entities in which we are able to exercise significant influence over operating and financial policies, generally 50% or less ownership interest, under the equity method of accounting. In such cases, our original investments are recorded at cost and adjusted for our share of earnings, losses and distributions. We account for our interests in entities where we have virtually no influence over operating and financial policies under the cost method of accounting. In such cases, our original investments are recorded at cost and any distributions received are recorded as income. Our investments in OnFolio JV I, LLC (“JV I”), OnFolio JV II, LLC (“JV II”) and OnFolio JV III, LLC (“JV III”) are accounted for under the cost method. All investments are subject to our impairment review policy. The Company recognized the value of its investments in these joint ventures at carryover basis based on the amount paid by the CEO to the joint venture for Onfolio JV 1 LLC, and agreed to pay the joint venture the contribution for Onfolio JV II LLC and Onfolio JV III LLC at the carryover basis for the amount the interest was acquired for by the CEO.
The current investment in unconsolidated affiliates accounted for under the equity method consists of a 35.8% interest in OnFolio JV IV, LLC (“JV IV”), which is involved in the acquisition, development and operation of online businesses to produce adverting revenue. The initial value of an investment in an unconsolidated affiliate accounted for under the equity method is recorded at the fair value of the consideration paid.
Variable Interest Entities
Variable interest entities (“VIEs”) are consolidated when the investor is the primary beneficiary. A primary beneficiary is the variable interest holder in a VIE with both the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and the obligation to absorb losses, or the right to receive benefits that could potentially be significant to the VIE. Management concluded that the joint ventures do not qualify as variable interest entities under the requirements of ASC 810, as the joint ventures 1) have sufficient equity to finance its activities; 2) have equity owners that as a group have the characteristics of a controlling financial interest in the business, through the ability to vote on a majority basis to change the managing member of the respective joint ventures, and 3) are structured with substantive voting rights. The Company accounts for its investments in the joint ventures under either the cost or equity method based on the equity ownership in each entity.
The Company, through its subsidiary Onfolio Management LLC, is the manager of Onfolio Agency SPV, LLC (“OA SPV”), and Onfolio Agency SPV 2, LLC (“OA SPV 2”), collectively referred to as “OA SPVs”. The Company does not hold any equity interest in OA SPVs, but will receive 10% of any cash distributions paid by OA SPV, and 20% of any cash distributions paid by OA SPV 2, to its members, when declared, as the management fee. The Company can be removed as manager of OA SPVs through a unanimous vote of the members. The Company determined that the fees it may receive for its role as manager do not constitute a variable interest in OA SPVs and will be accounted for as a revenue contract under ASC 606.
| F-11 |
| Table of Contents |
The Company, through its subsidiary RevenueZen, LLC, is the manager of CliAquire, LLC (“CliAquire”). The Company holds a 5% members interest in CliAquire and will receive profit distributions based on its membership interest. The Company can be removed as manager of CliAquire through a supermajority vote of the members. The Company determined that the investment in CliAquire will be accounted for as a cost method investment.
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 at the date of the balance sheet. The Company uses significant judgements when making estimates related to the assessment of control over variable interest entities, valuation of deferred tax assets and impairment of long lived assets. Actual results could differ from those estimates.
Cash and Cash Equivalent
Cash and cash equivalents include cash on hand, demand deposits with banks and liquid investments with an original maturity of three months or less.
Accounts Receivable
Accounts receivables are carried at their estimated collectible amounts. Trade accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial condition. The Company had an allowance for credit losses of $0 as of December 31, 2024 and 2023, respectively. Included in accounts receivable is $113,975 and $0 of unbilled fees related to website management revenue as of December 31, 2024 and 2023, respectively.
Inventories
Inventories are stated at the lower of actual cost or net realizable value. Cost is determined by using the first-in, first-out (FIFO) method.
Goodwill and Other Intangibles
The Company accounts for goodwill in a purchase business combination as the excess of the cost over the estimated fair value of net assets acquired. Business combinations can also result in the recognition of other intangible assets. Amortization of intangible assets, if applicable, occurs over their estimated useful lives. Goodwill, which is not amortized, is tested for impairment on an annual basis (or an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value). When testing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company elects to perform a qualitative assessment and determines that an impairment is more likely than not, then performance of the quantitative impairment test is required. The quantitative assessment is performed to estimate the fair value of a reporting unit. To determine the reasonableness of the estimated fair values, the Company reviews the assumptions to determine that neither the income approach nor the market approach provides significantly different valuations. If the estimated fair value exceeds the carrying value, no further work is required and no impairment loss is recognized. If the carrying value exceeds the estimated fair value, a non-cash impairment loss is recognized in the amount of that excess.
When performing the quantitative assessment, key assumptions used in the income approach are updated when the analysis is performed for each reporting unit. The assumptions that have the most significant effect on the fair value calculations are the projected revenue growth rates, future operating margins, discount rates, and terminal values. While the Company uses reasonable and timely information to prepare its discounted cash flow analysis, actual future cash flows or market conditions could differ significantly and could result in future impairment charges related to recorded goodwill balances.
| F-12 |
| Table of Contents |
Recently acquired reporting units generally represent a higher inherent risk of impairment, which typically decreases as the businesses are integrated into the enterprise. Negative industry or economic trends, disruptions to its business, actual results significantly below expected results, unexpected significant changes or planned changes in the use of the assets, divestitures, and market capitalization declines may have a negative effect on the fair value of the Company's reporting units.
Indefinite lived intangible assets are not amortized, but are separately tested for impairment during the fourth quarter of the fiscal year or on an interim basis if an event occurs that indicates the fair value is more likely than not below the carrying value. The Company first qualitatively assesses whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of an indefinite-lived trade name is less than its carrying amount. If necessary, the Company conducts a quantitative assessment using the relief-from-royalty method. This methodology assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these assets. To the extent the Company determines a fair value, the inputs used represent a Level 3 fair value measurement in the FASB fair value hierarchy given that the inputs are unobservable. The assumptions that have the most significant effect on the fair value calculations are the royalty rates, projected revenue growth rates, discount rates, and terminal values. The royalty rate is determined based on the profitability of the trade name to which it relates and observed market royalty rates. Revenue growth rates are determined after considering current and future economic conditions, recent sales trends, or other variables.
The assessment of fair value for impairment purposes requires significant judgments to be made by management. Although forecasts are based on assumptions that are considered reasonable by management and consistent with the plans and estimates management uses to operate the underlying businesses, there is significant judgment in estimating future operating results. Changes in estimates or the application of alternative assumptions could produce significantly different results.
The Company evaluates whether there has been an impairment of identifiable intangible assets with definite useful economic lives, or of the remaining life of such assets, when certain indicators of impairment are present. In the event that facts and circumstances indicate that the cost or remaining period of amortization of any asset may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future gross, undiscounted cash flows associated with the asset would be compared to the asset’s carrying amount to determine if a write-down to fair value or a revision in the remaining amortization period is required.
Long-lived Assets
The Company determines whether there has been an impairment of long-lived assets, excluding goodwill and other intangible assets, when certain indicators of impairment are present. In the event that facts and circumstances indicate that the cost or life of any long-lived asset may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future gross, undiscounted cash flows associated with the asset would be compared to the asset’s carrying amount to determine if a write-down to fair value or a revision to the remaining useful life is required. Future adverse changes in market conditions or poor operating results of underlying long-lived assets could result in losses or an inability to recover the carrying value of the long-lived assets that may not be reflected in the assets’ current carrying value, thereby possibly requiring an impairment charge or acceleration of depreciation or amortization expense in the future.
Revenue Recognition
The Company follows the guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (the “new revenue standard”) to all contracts using the modified retrospective method.
| F-13 |
| Table of Contents |
Revenue is recognized based on the following five step model:
| - | Identification of the contract with a customer |
| - | Identification of the performance obligations in the contract |
| - | Determination of the transaction price |
| - | Allocation of the transaction price to the performance obligations in the contract |
| - | Recognition of revenue when, or as, the Company satisfies a performance obligation |
The Company primarily earns revenue through website management, digital services, advertising and content placement on its online businesses, product sales, and digital product sales. Management services revenue is earned and recognized on a monthly basis as the services are provided. Advertising and content revenue is earned and recognized once the content is presented on the Company’s sites in accordance with the customer requirements. Product sales are recognized at the time the product is shipped to the customer. In certain circumstances, products are shipped directly by a supplier to the end customer at the Company’s request. The Company determined that it is the primary obligor in these contracts due to being responsible for fulfilling the customer contract, establishing pricing with the customer, and taking on credit risk from the customer. The Company recognizes revenue from these contracts with customers on a gross basis. Digital product sales represent electronic content that is transferred to the customer at time of purchase. The Company also earns revenue from online course subscriptions that may have monthly or annual subscriptions. In circumstances when a customer purchases an annual subscription upfront, the Company defers the revenue until the performance obligation has been satisfied.
The revenue from our Eastern Standard subsidiary is derived from website design and implementation contracts and typically span between 4 to 12 months. These contracts continuously transfer control to the customer as all of the work is completed electronically and is transferable to the customer at any point in time. Contract costs include labor, materials, and indirect costs.
We have numerous contracts that are in various stages of completion which require estimates to determine the forecasted costs at completion. Due to the nature of the work left to be performed on many of our contracts, the estimation of total cost at completion for fixed-price contracts is complex, subject to many variables and requires significant judgment. Estimates of total cost at completion are made each period and changes in these estimates are accounted for prospectively as cumulative adjustments to revenue recognized in the current period. If estimates of costs to complete fixed-price contracts indicate a loss, a provision is made through a contract write-down for the total loss anticipated.
Contract modifications are routine in the performance of our contracts. Contracts are often modified to account for changes in the contract specifications or requirements. In most instances, contract modifications are for goods or services that are not distinct, and, therefore, are accounted for as part of the existing contract.
As of December 31, 2024, the Company has $589,913 in deferred revenue related to unsatisfied performance obligations that are expected to be recognized during fiscal 2025.
The following table presented disaggregated revenue information for the years ended December 31, 2024 and 2023:
|
|
| For the Year ended December 31, 2024 |
|
| For the Year ended December 31, 2023 |
| ||
| Website management |
| $ | 1,069,716 |
|
| $ | 125,577 |
|
| Advertising and content revenue |
|
| 3,590,353 |
|
|
| 1,370,461 |
|
| Product sales |
|
| 539,115 |
|
|
| 661,538 |
|
| Digital Product Sales |
|
| 2,662,893 |
|
|
| 3,082,410 |
|
| Total revenue |
| $ | 7,862,077 |
|
| $ | 5,239,986 |
|
The Company does not have any single customer that accounted for greater than 10% of revenue during the years ended December 31, 2024 and 2023.
| F-14 |
| Table of Contents |
Cost of Revenue
Cost of product revenue consists primarily of costs associated with the acquisition and shipment of products being sold through the Company’s online marketplaces.
Cost of Service revenue which include website content creation costs including contract labor, domain and hosting costs and certain software costs related to website operations.
Net Income (Loss) Per Share
In accordance with ASC 260 “Earnings per Share,” basic net loss per common share is computed by dividing net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of common and common equivalent shares, including 412,250 stock options and 6,219,863 warrants, outstanding during the period. Such common equivalent shares have not been included in the computation of net loss per share as their effect would be anti-dilutive.
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, which requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.
Tax benefits of uncertain tax positions are recorded only where the position is “more likely than not” to be sustained based on their technical merits. The amount recognized is the amount that represents the largest amount of tax benefit that is greater than 50% likely of being ultimately realized. A liability is recognized for any benefit claimed or expected to be claimed, in a tax return in excess of the benefit recorded in the financial statements, along with any interest and penalty (if applicable) in such excess. The Company has no uncertain tax positions as of December 31, 2024 or 2023.
Fair Value of Financial Instruments
The carrying value of short-term instruments, including cash, accounts payable and accrued expenses, and notes payable approximate fair value due to the relatively short period to maturity for these instruments.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a three-level valuation hierarchy for disclosures of fair value measurements, defined as follows:
Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.
Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value.
The Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis.
| F-15 |
| Table of Contents |
Segment Reporting
The Company manages its operations under two segments for the purpose of assessing performance and making operating decisions – Business to Business (“B2B”) and Business to Consumer (“B2C)”. The Company’s Chief Operating Decision Maker (“CODM”) is its executive management committee. The CODM allocates resources and evaluates the performance of the Company using information about combined net income from operations. All significant operating decisions are based upon an analysis of the Company as two operating segments, which are the same as its reporting segments.
Stock-Based Compensation
Accounting Standards Codification (“ASC”) 718, “Accounting for Stock-Based Compensation” established financial accounting and reporting standards for stock-based compensation plans. It defines a fair value-based method of accounting for an employee stock option or similar equity instrument. Accordingly, employee share-based payment compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. The valuation of employee stock options is an inherently subjective process, since market values are generally not available for long-term, non-transferable employee stock options. Accordingly, the Black-Scholes option pricing model is utilized to derive an estimated fair value. The Black-Scholes pricing model requires the consideration of the following six variables for purposes of estimating fair value:
Expected Dividends. We have never declared or paid any cash dividends on any of our capital stock and do not expect to do so in the foreseeable future. Accordingly, we use an expected dividend yield of zero to calculate the grant-date fair value of a stock option.
Expected Volatility. The expected volatility is a measure of the amount by which our stock price is expected to fluctuate during the expected term of options granted. We determine the expected volatility solely based upon the historical volatility of a peer group of companies of similar size and with similar operations.
Risk-Free Interest Rate. The risk-free interest rate is the implied yield available on U.S. Treasury zero-coupon issues with a remaining term equal to the option’s expected term on the grant date.
Expected Term. The expected life of stock options granted is based on the actual vesting date and the end of the contractual term.
Stock Option Exercise Price and Grant Date Price of Common Stock. Currently the Company utilizes the most recent cash sale price of its common stock as the most reasonable indication of fair value.
The Company accounts for compensation cost for stock option plans and for share based payments to non-employees in accordance with ASC 505, “Accounting for Equity Instruments Issued to Non-Employees for Acquiring, or in Conjunction with Selling, Goods or Services”. Share-based awards to non-employees are expensed over the period in which the related services are rendered at their fair value.
Advertising
The Company expenses advertising costs as they are incurred. Advertising costs were $1,474,972 and $1,749,708 for the years ended December 31, 2024 and 2023, respectively.
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands the disclosures required for income taxes. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment should be applied on a prospective basis while retrospective application is permitted. The Company is currently evaluating the effect of this pronouncement on its disclosures.
| F-16 |
| Table of Contents |
In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure.” The ASU updates reportable segment disclosure requirements, primarily through requiring enhanced disclosures about significant segment expenses and information used to assess segment performance. The amendments do not change how segments are determined, aggregated, or how thresholds are applied to determine reportable segments. The Company adopted ASU No. 2023-07 during the year ended December 31, 2024.
NOTE 3 – GOING CONCERN
These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At December 31, 2024 the Company had not yet achieved consistent profitable operations and expects to incur further losses in the development of its business, all of which raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity or debt financing and/or related party advances. However, there is no assurance of additional funding being available.
NOTE 4 – SEGMENT INFORMATION
The Company manages its operations under two segments for the purpose of assessing performance and making operating decisions – Business to Business (“B2B”) and Business to Consumer (“B2C)”. The Company’s Chief Operating Decision Maker (“CODM”) is our Chief Executive Officer (CEO). The CODM allocates resources and evaluates the performance of the Company using information about combined net income from operations. All significant operating decisions are based upon an analysis of the Company as two operating segments, which are the same as its reporting segments.
We operate in two business segments: B2B and B2C. We organize our business segments based on the nature of products and services offered, and the economic characteristics of each segment. Following is a brief description of the activities of our business segments.
B2B
Our B2B segment includes the results of operations of Eastern Standard, RevenueZen, DDS Rank, SEO Butler, Contentellect, and DealPipe. These entities share similar characteristics such as customers being businesses, and being primarily service-related businesses.
B2C
Our B2C segment includes the results of operations of Proofread Anywhere, Mighty Deals, and Vital Reaction. These entities share characteristics such as the end customers being individual consumers, and sales being more focused on product sales, including digital sales.
Selected Financial Data by Business Segment
Net sales and operating profit of the Company’s business segments exclude intersegment sales, cost of sales and profit as these activities are eliminated in consolidation and thus are not included in management’s evaluation of performance of each segment. Our Chief Executive Officer (CEO) serves as our Chief Operating Decision Maker (CODM) and is responsible for reviewing segment performance and making decisions regarding resource allocation. Our CODM evaluates each segment’s performance based on metrics such as net sales, operating profit, and other key financial indicators, guiding strategic decisions to align with company-wide goals. Business segment operating profit includes the Company’s share of earnings or losses from equity method investees as the operating activities of the equity method investees are closely aligned with the operations of its business segments.
| F-17 |
| Table of Contents |
Summary Operating Results
Sales, cost of sales and operating profit for each of our business segments were as follows (in millions):
|
|
| For the Year Ended December 31, 2024 |
| |||||||||||||
|
|
| B2B |
|
| B2C |
|
| CORPORATE |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Revenue, services |
| $ | 4,368,661 |
|
| $ | 291,408 |
|
| $ | - |
|
| $ | 4,660,069 |
|
| Revenue, product sales |
|
| - |
|
|
| 3,202,008 |
|
|
| - |
|
|
| 3,202,008 |
|
| Total Revenue |
|
| 4,368,661 |
|
|
| 3,493,416 |
|
|
| - |
|
|
| 7,862,077 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenue, services |
|
| 2,561,523 |
|
|
| 47,538 |
|
|
| - |
|
|
| 2,609,061 |
|
| Cost of revenue, product sales |
|
| - |
|
|
| 708,139 |
|
|
| - |
|
|
| 708,139 |
|
| Total cost of revenue |
|
| 2,561,523 |
|
|
| 755,677 |
|
|
| - |
|
|
| 3,317,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
|
| 1,807,138 |
|
|
| 2,737,739 |
|
|
| - |
|
|
| 4,544,877 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative |
|
| 1,737,837 |
|
|
| 2,091,482 |
|
|
| 1,888,924 |
|
|
| 5,718,243 |
|
| Professional fees |
|
| 64,439 |
|
|
| 43,157 |
|
|
| 841,155 |
|
|
| 948,751 |
|
| Acquisition costs |
|
| - |
|
|
| - |
|
|
| 264,731 |
|
|
| 264,731 |
|
| Impairment of goodwill and intangible assets |
|
| - |
|
|
| 121,000 |
|
|
| - |
|
|
| 121,000 |
|
| Total operating expenses |
|
| 1,802,276 |
|
|
| 2,255,639 |
|
|
| 2,994,810 |
|
|
| 7,052,725 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (Loss) from operations |
| $ | 4,862 |
|
| $ | 482,100 |
|
| $ | (2,994,810 | ) |
| $ | (2,507,848 | ) |
|
|
| For the Year Ended December 31, 2023 |
| |||||||||||||
|
|
| B2B |
|
| B2C |
|
| CORPORATE |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Revenue, services |
| $ | 1,371,997 |
|
| $ | 124,041 |
|
| $ | - |
|
| $ | 1,496,038 |
|
| Revenue, product sales |
|
| - |
|
|
| 3,743,948 |
|
|
| - |
|
|
| 3,743,948 |
|
| Total Revenue |
|
| 1,371,997 |
|
|
| 3,867,989 |
|
|
| - |
|
|
| 5,239,986 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenue, services |
|
| 837,888 |
|
|
| - |
|
|
| - |
|
|
| 837,888 |
|
| Cost of revenue, product sales |
|
| - |
|
|
| 1,159,267 |
|
|
| - |
|
|
| 1,159,267 |
|
| Total cost of revenue |
|
| 837,888 |
|
|
| 1,159,267 |
|
|
| - |
|
|
| 1,997,155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
|
| 534,109 |
|
|
| 2,708,722 |
|
|
| - |
|
|
| 3,242,831 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative |
|
| 530,382 |
|
|
| 2,567,703 |
|
|
| 2,883,516 |
|
|
| 5,981,601 |
|
| Professional fees |
|
| 133,420 |
|
|
| 68,874 |
|
|
| 958,116 |
|
|
| 1,160,410 |
|
| Acquisition costs |
|
| - |
|
|
| - |
|
|
| 326,899 |
|
|
| 326,899 |
|
| Impairment of goodwill and intangible assets |
|
| 903,897 |
|
|
| 4,112,868 |
|
|
| - |
|
|
| 5,016,765 |
|
| Total operating expenses |
|
| 1,567,699 |
|
|
| 6,749,445 |
|
|
| 4,168,531 |
|
|
| 12,485,675 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from operations |
| $ | (1,033,590 | ) |
| $ | (4,040,723 | ) |
| $ | (4,168,531 | ) |
| $ | (9,242,844 | ) |
| F-18 |
| Table of Contents |
Included within Selling, general and administrative is intangible asset amortization expense of $789,556 for the B2B segment and $117,181 for the B2C segment for the year ended December 31, 2024. Intangible asset amortization expense of $234,943 for the B2B segment and $445,750 for the B2C segment was included for the year ended December 31, 2023.
Unallocated Items
Business segment operating profit excludes the other items not considered part of management’s evaluation of segment operating performance such as a portion of management and administration costs, legal fees and settlements, stock-based compensation expense, significant asset impairments, gains or losses from divestitures, intangible asset amortization expense, and other miscellaneous corporate activities. Excluded items are included in the reconciling item “Corporate” between operating profit from our business segments and our consolidated operating profit. See “Note 1 – Organization and Significant Accounting Policies” (under the caption “Use of Estimates”) for a discussion related to certain factors that may impact the comparability of net sales and operating profit of our business segments.
Assets
Total assets for each of our business segments were as follows:
|
|
| As of December 31, 2024 |
|
| As of December 31, 2023 |
| ||
| B2B |
| $ | 6,495,983 |
|
| $ | 1,115,029 |
|
| B2C |
|
| 2,097,863 |
|
|
| 3,206,568 |
|
| Total business segment assets |
|
| 8,593,846 |
|
|
| 4,321,597 |
|
| Corporate assets |
|
| 998,851 |
|
|
| 804,641 |
|
| Total Assets |
| $ | 9,592,697 |
|
| $ | 5,126,238 |
|
Corporate assets primarily include cash and cash equivalents, and investments in unconsolidated joint ventures. During the years ended December 31, 2024 and 2023, the Company incurred no reportable capital expenditures related to its segments.
| F-19 |
| Table of Contents |
NOTE 5 – BUSINESS ACQUISITIONS
Contentellect Limited
On January 13, 2023, Onfolio Assets LLC, the Company’s wholly owned subsidiary, entered into an Asset Purchase Agreement (“Contentellect Asset Purchase Agreement”) with Contentellect Limited (“Contentellect”), a Guernsey limited liability company, and Mark Whitman, the sole owner of Contentellect. Pursuant to the Contentellect Asset Purchase Agreement, Onfolio Assets LLC purchased from Contentellect substantially all of Contentellect’s assets utilized in the operation of the business of providing online (i) content writing services (including white label content creation, eBook writing and eCommerce product description writing), (ii) website link building services (including white label link building, HARO link building and SEO outreach services), (iii) social media marketing services, and (iv) virtual assistant services to individuals, businesses and agencies through the website that the domain name www.contentellect.com points at (the “Contentellect Business”).
Pursuant to the Contentellect Asset Purchase Agreement, and subject to the terms and conditions contained therein, at the closing, Contentellect will sell to Onfolio Assets LLC the assets, properties and rights of every kind and nature related to the Contentellect Business all as more fully described in the Contentellect Asset Purchase Agreement. The aggregate purchase price for the Contentellect Business was $850,000 in cash. This acquisition closed on February 1, 2023. The acquisition of Contentellect is being accounted for as a business combination under ASC 805.
The following information summarizes the allocation of the fair values assigned to the assets acquired at the acquisition date:
| Purchase Price Allocation |
|
|
| |
| Developed technology |
| $ | 127,500 |
|
| Customer relationships |
|
| 510,000 |
|
| Trademarks and Trade Names |
|
| 170,000 |
|
| Non-Compete agreement |
|
| 42,500 |
|
| Net assets acquired |
| $ | 850,000 |
|
RevenueZen
On December 31, 2023, RevenueZen (the “Acquired Business”) and the Company and RevenueZen LLC, a Delaware limited liability company ("RevenueZen Delaware") a subsidiary of the Company, entered into and closed an asset purchase agreement (the "RevenueZen Asset Purchase Agreement"), for the purchase by the Company of the Acquired Business.
Pursuant to the RevenueZen Asset Purchase Agreement, and subject to the terms and conditions contained therein, at the closing, RevenueZen agreed to sell to the Company the Acquired Business, all as more fully described in the RevenueZen Asset Purchase Agreement. The aggregate purchase price for the Acquired Business was $1,332,000, consisting of $240,000 in cash at closing, $425,000 in Company Series A Preferred Shares, a $440,000 11% interest only secured promissory note made by RevenueZen Delaware due December 31, 2025 (the “RevenueZen Promissory Note”), and additional earn-out payments that could be paid to RevenueZen pursuant to the earn-out formula described in the RevenueZen Asset Purchase Agreement. In addition, five founders of the RevenueZen received a total of a 12% equity interest in RevenueZen Delaware, and they will serve in leadership roles with the RevenueZen Delaware team. Also, certain of the founders received a total of 270,000 non-qualified stock options to purchase Company common shares at $0.51 per share for a period of 10 years pursuant to the Company’s 2020 Equity Compensation Plan.
The earn-out formula specifies for a period of one year, if the SDE (defined in Note 10 below) of the RevenueZen business exceeds $227,000, the sellers of RevenueZen Delaware would be entitled to receive an amount equal to three times the amount above $227,000 of SDE. SDE in this case is defined as gross revenue, less returns, discounts, and refunds and reduced by the cost of contractor payments, freelance copywriters, and payroll and benefits, consistent with the practices of the Seller in the operations of the Business, and for the sake of clarity exclude any payments, reimbursements, administrative charges, overhead charges, or other payments of any kind to the Buyer, Holdings, or any affiliate thereof. The earn-out amount will include 20% of any revenues of the Company that are from any customers of RevenueZen Delaware. The Company has the option to pay any earn-out amount in cash or in shares of preferred stock of the Company.
The transaction closed on January 4, 2024, when consideration was transferred by the Company and control was obtained by the Company and was accounted for as a business combination under ASC 805. The earn-out agreement is accounted for as a contingent consideration liability under ASC 805, with changes in fair value of the potential earn-out amount recognized in current earnings.
| F-20 |
| Table of Contents |
The aggregate fair value of consideration for the RevenueZen acquisition was as follows:
| Purchase Price: |
|
|
| |
|
|
| Amount |
| |
| Cash paid to seller |
| $ | 240,000 |
|
| Notes payable issued to seller |
|
| 440,000 |
|
| Options to purchase common shares issued to seller |
|
| 60,000 |
|
| Estimated fair value of additional earn-out payments |
|
| 986,000 |
|
| Series A Preferred Shares issued to seller |
|
| 425,000 |
|
| Fair value of 12% equity interest in RevenueZen retained by Sellers |
|
| 126,000 |
|
| Total purchase consideration |
| $ | 2,277,000 |
|
The following information summarizes the allocation of the fair values assigned to the assets acquired at the acquisition date:
| Purchase Price Allocation |
|
|
| |
| Developed technology |
| $ | 190,000 |
|
| Customer relationships |
|
| 343,000 |
|
| Trademarks and Trade Names |
|
| 300,000 |
|
| Non-Compete agreement |
|
| 160,000 |
|
| Goodwill |
|
| 1,284,000 |
|
| Net assets acquired |
| $ | 2,277,000 |
|
From the period of acquisition of the RevenueZen Business through December 31, 2024, the Company generated total revenue and net loss of $2,072,991 and $124,735, respectively. This net loss is inclusive of $352,833 intangible asset amortization expense.
During the measurement period the Company recorded adjustments to decrease intangible assets and goodwill of $238,000 and $645,000, respectively, as a result of change in estimates related to the expected revenue growth rates and changes in the estimates of the expected amounts owed under the earn-out provisions.
DDS Rank
On June 6, 2024, SEO Marketing, Inc (dba DDS Rank) (“DDS Rank” or the “Acquired Business”) and DDS Rank LLC (“DDS Rank Delaware”), a subsidiary of the Company entered into and closed an asset purchase agreement (the "DDS Asset Purchase Agreement"), for the purchase by the Company of the Acquired Business.
Pursuant to the DDS Asset Purchase Agreement, and subject to the terms and conditions contained therein, at the closing, DDS Rank agreed to sell to the Company the Acquired Business, all as more fully described in the DDS Asset Purchase Agreement. The aggregate purchase price for the Acquired Business was $600,000, consisting of $200,000 in cash paid by OA SPV at closing, $200,000 in Company Series A Preferred Shares, and a $200,000 7% interest only secured promissory note made by DDS Rank Delaware due June 6, 2026 (the “DDS Promissory Note”).
The transaction closed on June 24, 2024, when consideration was transferred by the Company and control was obtained by the Company and was accounted for as a business combination under ASC 805.
The aggregate fair value of consideration for the DDS Rank acquisition was as follows:
| Purchase Price: |
|
|
| |
|
|
| Amount |
| |
| Cash paid to seller |
|
| 200,000 |
|
| Notes payable issued to seller |
|
| 200,000 |
|
| Series A Preferred Shares issued to seller |
|
| 200,000 |
|
| Total purchase consideration |
| $ | 600,000 |
|
The following information summarizes the allocation of the fair values assigned to the assets acquired at the acquisition date:
| Purchase Price Allocation |
|
|
| |
| Developed technology |
| $ | 90,000 |
|
| Customer relationships |
|
| 360,000 |
|
| Trademarks and Trade Names |
|
| 120,000 |
|
| Non-Compete agreement |
|
| 30,000 |
|
| Net assets acquired |
| $ | 600,000 |
|
| F-21 |
| Table of Contents |
From the period of acquisition of the DDS Rank Business through December 31, 2024, the Company generated total revenue and net loss of $141,572 and $48,362, respectively, including intangible asset amortization expense of $112,250.
Eastern Standard
On September 20, 2024, Eastern Standard LLC (“Eastern Standard Delaware”), a Delaware limited liability company and majority owned subsidiary, entered into an Asset Purchase Agreement (“Asset Purchase Agreement”) with Eastern Standard, LLC (“Eastern Standard Pennsylvania”), a Pennsylvania limited liability company, and its individual owners. Pursuant to the Asset Purchase Agreement, Eastern Standard Delaware will purchase from Eastern Standard Pennsylvania all of Eastern Standard Pennsylvania’s assets utilized in the operation of its business of providing digital marketing services, including integrated branding, and digital customer experiences (the “Acquired Business”).
Pursuant to the Asset Purchase Agreement, and subject to the terms and conditions contained therein, at the closing, Eastern Standard Pennsylvania agreed to sell to Eastern Standard Delaware the Acquired Business, all as more fully described in the Asset Purchase Agreement. The aggregate purchase price for the Acquired Business is $2,160,000. As of the closing, the Company owned 70% of Eastern Standard Delaware in exchange for $1,250,000 payable pursuant to two secured promissory notes which are guaranteed by the Company, and $410,000 of the Company’s Series A Preferred Shares. The entities comprising the Company’s special purpose vehicle funding program owns an aggregate of 20% of Eastern Standard Delaware in exchange for $500,000 payable in cash. Eastern Standard Pennsylvania owns a 10% roll-over equity interest in Eastern Standard Delaware.
The transaction closed on October 18, 2024, when consideration was transferred by Onfolio and control was obtained by Onfolio and will be accounted for as a business combination under ASC 805.
The aggregate fair value of consideration for the DDS Rank acquisition was as follows:
| Purchase Price: |
|
|
| |
|
|
|
|
| |
| Cash |
| $ | 500,000 |
|
| Promissory Note, net of discount |
|
| 1,250,000 |
|
| Preferred Shares |
|
| 410,000 |
|
| Roll-over equity |
|
| 240,000 |
|
| Total purchase consideration |
|
| 2,400,000 |
|
The following information summarizes the allocation of the fair values assigned to the assets acquired at the acquisition date:
| Purchase Price Allocation |
|
|
| |
| Accounts receivable |
| $ | 217,878 |
|
| Unbilled receivables |
|
| 165,855 |
|
| Fixed assets |
|
| 5,135 |
|
| Website domains |
|
| 90,000 |
|
| Customer relationships |
|
| 490,000 |
|
| Trademarks and trade names |
|
| 530,000 |
|
| Non-compete agreement |
|
| 20,000 |
|
| Goodwill |
|
| 1,407,602 |
|
| Deferred revenues |
|
| (526,470 | ) |
|
|
|
|
|
|
| Net assets acquired |
| $ | 2,400,000 |
|
| F-22 |
| Table of Contents |
From the period of acquisition of the Eastern Standard Business through December 31, 2024, the Company generated total revenue and net income of $973,716 and $74,807, respectively, including intangible asset amortization expense of $85,125.
Unaudited Pro Forma Financial Information
The following table sets forth the pro-forma consolidated results of operations for the year ended December 31, 2024 and 2023 as if the Contentellect, Revenue Zen, DDS Rank, and Eastern Standard acquisitions occurred on January 1, 2023. The pro forma results of operations are presented for informational purposes only and are not indicative of the results of operations that would have been achieved if the acquisitions had taken place on the dates noted above, or of results that may occur in the future.
|
|
| Year ended December 31, |
| |||||
|
|
| 2024 |
|
| 2023 |
| ||
| Revenue |
| $ | 11,456,601 |
|
| $ | 9,591,437 |
|
| Operating loss |
|
| (2,099,022 | ) |
|
| (9,609,216 | ) |
| Net loss |
|
| (1,446,510 | ) |
|
| (9,721,880 | ) |
| Net loss per common share |
| $ | (0.37 | ) |
| $ | (1.95 | ) |
| Weighted Average common shares outstanding |
|
| 5,117,941 |
|
|
| 5,107,395 |
|
Impairment of Goodwill
During the year ended December 31, 2023, the Company recognized a goodwill impairment loss of $1,597,045 related to the BCP Media Acquisition, $580,284 related to the BWPS Acquisition, and $455,688 related to the SEO Butler Acquisition, for total aggregate goodwill impairment of $2,633,017 related to the above acquisitions, as a result of lower than expected cash flows from the acquired businesses and an increase in interest rates leading to a higher discount rate used. The Company did not recognize any impairment charges related to goodwill for the year ended December 31, 2024.
NOTE 6 – INVESTMENTS IN JOINT VENTURES
The Company holds various investments in certain joint ventures as described below.
Cost method investments
OnFolio JV I, LLC (“JV I”) was formed on October 11, 2019 under the laws of Delaware. OnFolio LLC is the managing member of JV I and has operational and financial decision making. The manager of JV 1 can be removed by a majority vote of the equity holders of JV I. On August 1, 2020, the Company received an investment of 2.72% by assignment from Dominic Wells, the Company’s CEO, who invested $10,000 into JV I for the equity interest. As manager of JV I, the Company will receive a monthly management fee of $2,500, and 50% of net profits of JV I above the monthly minimum of $12,500. In the event of the sale of a website that JV I manages, the Company will received 50% of the excess of the sales price above the price paid for the site. During the year ended December 31, 2022, the Company purchased an additional 10.91% interest from existing owners for $52,500 in cash, bringing its total equity interest to 13.65%. The management fee to the Company described above was waived for fiscal year ended December 31, 2024 and 2023, due to lower operating results of JV I.
OnFolio JV II, LLC (“JV II”) was formed on November 8, 2019 under the laws of Delaware. OnFolio LLC is the managing member of JV II and has operational and financial decision making. The manager of JV II can be removed by a majority vote of the equity holders of JV II. On August 1, 2020, the Company received an investment of approximately 2.14% by assignment from Dominic Wells, the Company’s CEO, who invested $10,000 into JV II for the equity interest.. Additionally, during the year ending December 31, 2020 the CEO acquired an additional interest from an existing JV II investor and transferred it to the Company, bringing its total equity interest in JV II to 4.28%. During the year ending December 31, 2021, the company acquired additional interest from an existing JV II investor by paying $9,400 for his 2.14%, bringing its total equity interest in JV II to 6.42%. As manager of JV II, the Company will receive a monthly management fee of $1,500, and 50% of net profits of JV II above the monthly minimum of $16,500. In the event of the sale of a website that JV II manages, the Company will receive 50% of the excess of the sales price above the price paid for the site. During the year ended December 31, 2022, the Company purchased an additional 4.28% interest from an existing owner for $10,000 in cash, bringing its total equity interest to 10.70%. Based on the cash purchase price of the additional interest, the Company determined there was an implied impairment in the amount of $14,401 related to the cost basis of JV II. The management fee to the Company described above was waived for fiscal years ended December 31, 2024 and 2023 due to lower operating results of JV II.
| F-23 |
| Table of Contents |
OnFolio JV III, LLC (“JV III”) was formed on January 3, 2020 under the laws of Delaware. OnFolio LLC is the managing member of JV III and has operational and financial decision making. The manager of JV 1 can be removed by a majority vote of the equity holders of JV III. On August 1, 2020, the Company received an investment of approximately 1.94% by assignment from Dominic Wells, the Company’s CEO, who invested $10,000 into JV I for the equity interest. The $10,000 owed by the Company is included in Due to related parties on the consolidated balance sheet as of December 31, 2020. During the year ending December 31, 2021, the company acquired additional interests from existing JV II investors by paying $40,000 for 7.7652%, bringing its total equity interest in JV III to 9.7052%. As manager of JV III, the Company will receive a monthly management fee of $3,000, and 50% of net profits of JV III above the monthly minimum of $16,500. In the event of the sale of a website that JV III manages, the Company will receive 50% of the excess of the sales price above the price paid for the site. During the year ended December 31, 2022, the Company purchased an additional 3.88% interest from an existing owner for $5,000 in cash, bringing its total equity interest to 13.59%. Based on the cash purchase price of the additional interest, the Company determined there was an impairment in the amount of $37,493 related to the cost basis of JV III. The management fee to the Company described above was reduced to $500 for fiscal year ended December 31, 2022 due to lower operating results of JV III. The management fee to the Company described above was waived for fiscal years ended December 31, 2024 and 2023 due to lower operating results of JV III.
OnFolio Groupbuild 1 LLC (“Groupbuild”) was formed on April 22, 2020 under the laws of Delaware. The Company, as manager, is entitled to 20% of the profits of Groupbuild, and an annual management fee of $15,000. The Company was assigned a 20% interest, value at $49,000 in Groupbuild by the Company’s CEO on August 1, 2020.
On March 4, 2024, the Company invested $10,000 into Coaching Plus Capital LLC for a 9.95% equity interest in the ownership.
On May 31, 2024, the Company, through its subsidiary Revenue Zen LLC, invested $24,000 into CliAcquire LLC for a 5% equity interest in the ownership.
On November 1, 2024, the Company, through its subsidiary Revenue Zen LLC, invested $25,000 into Grow Solo Media Ltd. for a 5% equity interest in the ownership.
Equity Method Investments
OnFolio JV IV, LLC (“JV IV”) was formed on January 3, 2020 under the laws of Delaware. The Company holds an equity interest of 35.8% in JV IV, and is the manager of JV IV. The Company acquired this interest on August 1, 2020 for $290,000 through issuance of a Note payable to the joint venture. The Company paid $215,000 during the years ended December 31, 2022. The manager of JV IV can be removed by a majority vote of the equity holders of JV IV.
The balance sheet of JV IV at December 31, 2024 included total assets of $842,594 and total liabilities of $27,153. The balance sheet of JV IV at December 31, 2023 included total assets of $842,794 and total liabilities of $11,823. Additionally, the income statement for JV IV for the years ended December 31, 2024 and 2023 included the following:
|
|
| For the Year ended December 31, 2024 |
|
| For the Year ended December 31, 2023 |
| ||
| Revenue |
| $ | 18,985 |
|
| $ | 52,108 |
|
| Net Income (loss) |
| $ | (13,440 | ) |
| $ | 36,843 |
|
The Company recognized equity method loss of $4,812 and equity method income of $13,190 during the years ended December 31, 2024 and 2023, and received dividends from JV IV of $0 and $20,473, which were accounted for as returns on investment.
| F-24 |
| Table of Contents |
NOTE 7 – INTANGIBLE ASSETS
The following table represents the balances of intangible assets as of December 31, 2024 and 2023;
|
|
| Estimated life |
| December 31, 2024 |
|
| December 31, 2023 (Revised) |
| ||
| Website Domains |
| Indefinite |
| $ | 297,323 |
|
| $ | 418,323 |
|
| Website Domains |
| 4 years |
|
| 497,500 |
|
|
| 257,500 |
|
| Customer relationships |
| 4-6 years |
|
| 2,081,148 |
|
|
| 992,000 |
|
| Trademarks and Tradenames |
| 10 years |
|
| 1,120,000 |
|
|
| 220,000 |
|
| Non-compete agreements |
| 3 years |
|
| 252,500 |
|
|
| 72,500 |
|
|
|
|
|
|
| 4,248,471 |
|
|
| 1,960,323 |
|
| Accumulated Amortization - Website domains |
|
|
|
| (125,946 | ) |
|
| (67,612 | ) |
| Accumulated Amortization - Customer Relationships |
|
|
|
| (626,994 | ) |
|
| (171,161 | ) |
| Accumulated Amortization - Trademarks / Tradenames |
|
|
|
| (81,834 | ) |
|
| (21,420 | ) |
| Accumulated Amortization - Non-Compete |
|
|
|
| (90,486 | ) |
|
| (24,650 | ) |
| Net Intangible |
|
|
| $ | 3,323,211 |
|
| $ | 1,675,480 |
|
On February 1, 2023, the Company closed on its acquisition of the Contentellect Business. As part of the acquisition, the Company acquired assets related to the websites operated by Contentellect. Pursuant to the purchase price allocation as further described in Note 4, the Company allocated $850,000 , which is to be amortized over the estimated life of the assets ranging from 2-10 years.
On January 1, 2024, the Company closed on its acquisition of RevenueZen LLC. As part of the acquisition, the Company acquired assets related to the websites operated by RevenueZen. Pursuant to the purchase price allocation as further described in Note 4, the Company allocated $993,000, which is to be amortized over the estimated life of the assets ranging from 2-10 years.
On April 1, 2024, the Company closed on its acquisition of certain customers from First Page LLC (“First Page”). The acquisition is being accounted for as an asset acquisition and was comprised of an upfront payment of $15,000 cash, $20,000 cash contingent on signing customers to a new contract, and a revenue share amount equal to 18% of gross revenues for the acquired customers for 3 years following the acquisition date. On the date of acquisition, the Company estimated the fair value of the revenue share to be $343,148.
On June 24, 2024, the Company closed on its acquisition of the DDS Rank LLC. As part of the acquisition, the Company acquired assets related to the websites operated by DDS Rank. Pursuant to the purchase price allocation as further described in Note 4, the Company allocated $600,000, which is to be amortized over the estimated life of the assets ranging from 2-10 years.
On October 1, 2024, the Company closed on its acquisition of Eastern Standard LLC. As part of the acquisition, the Company acquired assets related to the websites operated by Eastern Standard. Pursuant to the purchase price allocation as further described in Note 4, the Company allocated $1,130,000, which is to be amortized over the estimated life of the assets ranging from 2-10 years.
On November 20, 2024, the Company, and its subsidiary WP Folio entered into an Asset Purchase Agreement (the “WP Folio Purchase Agreement”) with WSC 8034 OpCo 1 LLC (“Buyer”). Pursuant to the WP Folio Purchase Agreement, Buyer will purchase from the Company all of WP Folio’s assets utilized in the operation of its business of providing cyber security software solution for an aggregate purchase price of $780,000 in cash. As a result of the transaction, the Company recorded a gain on the disposition of the net assets in the amount of $453,581.
During the year ended December 31, 2024, the Company recognized impairment losses of $121,000 of intangible assets related to the website domain operating under Vital Reaction. During the year ended December 31, 2023, the Company recognized impairment losses of $2,383,748 of intangible assets, which was comprised of $700,000 related to the Mighty Deals website domains, $84,000 related to Pretty Neat Creative, operating under Onfolio Crafts LLC, $105,937 related to various website domains operating under Onfolio Assets LLC., $1,045,604 related to the BCP Media acquisition intangible assets, and $448,207 related to the SEO Butler intangible assets.
| F-25 |
| Table of Contents |
The following is an amortization analysis of the annual amortization of intangible assets on a fiscal year basis as of December 31, 2024:
| For the year ended December 31, schedule of annual expected amortization expense |
| Amount |
| |
|
|
|
|
| |
| 2025 |
| $ | 1,199,449 |
|
| 2026 |
|
| 706,907 |
|
| 2027 |
|
| 297,156 |
|
| 2028 |
|
| 375,125 |
|
| Thereafter |
|
| 447,251 |
|
| Total remaining intangibles amortization |
| $ | 3,025,888 |
|
NOTE 8 – STOCKHOLDERS’ DEFICIT
Preferred stock
The Company’s authorized preferred stock consists of 5,000,000 shares of preferred stock, with a par value of $0.001 per share. On November 20, 2020, the Company designated 1,000,000 shares of Series A Preferred Stock (“Series A”). The Series A has a liquidation preference to all other securities, a liquidation value of $25 per share, receives cumulative dividends payable in cash of 12% per year, payable monthly. The Series A does not have voting rights, except that the Company may not: 1) create any additional class or series of stock, nor any security convertible into stock of the Company; 2) modify the Series A designation; 3) initiate and dividend outside of without approval of at least two-thirds of the holders of the Series A. The Company has the right, but not obligation to redeem the Series A beginning January 1, 2026, at the liquidation value per share plus any unpaid dividends.
On January 4, 2024, in connection with the RevenueZen Acquisition as discussed in Note 5, the Company issued 17,000 shares of Series A Preferred stock for a value of $425,000.
On June 24, 2024, in connection with the DDS Rank Acquisition as discussed in Note 5, the Company issued 8,000 shares of Series A Preferred stock for a value of $200,000.
On October 1, 2024, in connection with the Eastern Standard Acquisition as discussed in Note 5, the Company issued 16,400 shares of Series A Preferred stock for a value of $410,000.
During the year ended December 31, 2024, the Company sold 800 shares of Series A Preferred Stock for $20,000 of cash proceeds.
During the year ended December 31, 2023, the company issued 22,600 Series A Preferred Stock in exchange for $565,000 of cash proceeds.
During the years ended December 31, 2024 and 2023, the company recognized $354,228 and $227,298 in dividends to the Series A shareholders, respectively, and made cash dividend payments of $321,442 and $213,691. As of December 31, 2024 and 2023, the Company has remaining unpaid dividends of $100,797 and $68,011.
As of December 31, 2024, there were 134,460 Series A preferred shares outstanding.
Common stock
The Company’s authorized common stock consists of 50,000,000 shares of common stock, with a par value of $0.001 per share. All shares of common stock have equal voting rights and, when validly issued and outstanding, are entitled to one non-cumulative vote per share in all matters to be voted upon by shareholders. The shares of common stock have no pre-emptive, subscription, conversion or redemption rights and may be issued only as fully paid and non-assessable shares. Holders of the common stock are entitled to equal ratable rights to dividends and distributions with respect to the common stock, as may be declared by the Board of Directors out of funds legally available. The Company has not declared any dividends on common stock to date.
In 2020, the Board of Directors of the Company approved the Onfolio Holdings, Inc. 2020 Equity Incentive Plan (the “2020 Plan”). The 2020 Plan allows for the Board of Directors to grant various forms of incentive awards covering up to 2,000,000 shares of common stock. During the year ended December 31, 2022, the Board of Directors amended the 2020 Plan to increase the aggregate number of shares available for issuance under the 2020 Plan to 2,600,000 shares of common stock. As of December 31, 2024, there were 2,167,750 shares of the Company’s common stock remaining to be issued under the Amended 2020 Plan.
| F-26 |
| Table of Contents |
Common Share Awards
During the year ended December 31, 2020, the Company granted a total of 3,233,336 shares to various employees and consultants for services rendered. The Company recognized stock-based compensation expense of $0 and $447,248 related to the vesting of the share awards during the year ended December 31, 2024 and 2023, respectively. As of December 31, 2024, the shares have vested in full and no additional expense is to be recognized related to these awards.
Stock Options
On January 4, 2024, the Company awarded an aggregate of 270,000 options to purchase shares of common stock to certain of the founders of Revenue Zen as discussed in Note 4, at $0.51 per share for a period of 10 years pursuant to the Company’s 2020 Equity Compensation Plan. The Company estimated fair value of these options to be $0.22 per share using a, Black-Scholes option pricing model, incorporating the Company’s capital structure and the components of the consideration transferred to the sellers of the RevenueZen Delaware, and the fair value of the options is included as part of the consideration transferred as part of the acquisition.
During the year ended December 31, 2023, the Company awarded an aggregate of 60,000 common stock options to the non-employee directors of the Company, of which 30,000 vested immediately, and 2,500 per quarter thereafter until fully vested. One consultant was awarded 36,000 options that vest monthly over a one year period. The fair value of the stock options was estimate using a Black-Scholes option pricing model and the following assumptions: 1) dividend yield of 0%; 2) risk-free rate of between 3.70% and 4.22%; 3) volatility of between 90.14% and 92.85% based on a group of peer group companies; and an expected term of five to ten years.
A summary of stock option information is as follows:
|
|
| Outstanding Awards |
|
| Weighted Average Grant Date Fair Value |
|
| Weighted Average Exercise price |
| |||
| Outstanding at December 31, 2022 |
|
| 59,850 |
|
| $ | 4.15 |
|
| $ | 9.11 |
|
| Granted |
|
| 96,000 |
|
|
| 0.80 |
|
|
| 1.05 |
|
| Exercised |
|
| - |
|
|
| - |
|
|
| - |
|
| Forfeited and cancelled |
|
| (22,661 | ) |
|
| (4.01 | ) |
|
| (13.68 | ) |
| Outstanding at December 31, 2023 |
|
| 133,189 |
|
|
| 1.80 |
|
|
| 2.52 |
|
| Granted |
|
| 310,000 |
|
|
| 0.27 |
|
|
| 0.58 |
|
| Exercised |
|
| (20,000 | ) |
|
| (0.36 | ) |
|
| (0.65 | ) |
| Forfeited and cancelled |
|
| (10,939 | ) |
|
| (3.69 | ) |
|
| (7.23 | ) |
| Outstanding at December 31, 2024 |
|
| 412,250 |
|
| $ | 0.65 |
|
| $ | 1.02 |
|
| Exercisable at December 31, 2024 |
|
| 385,034 |
|
| $ | 0.65 |
|
| $ | 1.03 |
|
The weighted average remaining contractual life is approximately 7.97 years for stock options outstanding with an intrinsic value of $252,420 as of December 31, 2024. The Company recognized stock-based compensation of $47,868 and $124,310 during the years ended December 31, 2024 and 2023, respectively. The Company expects to recognize an additional $6,813 of compensation cost related to options that are expected to vest.
| F-27 |
| Table of Contents |
Common Stock Warrants
A summary of stock warrant information is as follows:
|
|
| Outstanding Awards |
|
| Weighted Average Grant Date Fair Value |
|
| Weighted Average Exercise price |
| |||
| Outstanding at December 31, 2022 |
|
| 6,219,863 |
|
|
| 4.21 |
|
|
| 5.01 |
|
| Granted |
|
| - |
|
|
| - |
|
|
| - |
|
| Exercised |
|
| - |
|
|
| - |
|
|
| - |
|
| Forfeited and cancelled |
|
| - |
|
|
| - |
|
|
| - |
|
| Outstanding at December 31, 2023 |
|
| 6,219,863 |
|
| $ | 4.21 |
|
| $ | 5.01 |
|
| Granted |
|
| - |
|
|
| - |
|
|
| - |
|
| Exercised |
|
| - |
|
|
| - |
|
|
| - |
|
| Forfeited and cancelled |
|
| (20,000 | ) |
|
| (3.00 | ) |
|
| (4.75 | ) |
| Outstanding at December 31, 2024 |
|
| 6,199,863 |
|
| $ | 4.21 |
|
| $ | 5.01 |
|
| Exercisable at December 31, 2024 |
|
| 6,199,863 |
|
| $ | 4.21 |
|
| $ | 5.01 |
|
The weighted average remaining contractual life is approximately 2.65 years for stock warrants outstanding with no intrinsic value of as of December 31, 2024.
NOTE 9 – RELATED PARTY TRANSACTIONS
From time to time, the Company pays expenses directly on behalf of the Joint Ventures that it manages and receives funds on behalf of the joint ventures. As of December 31, 2024 and 2023 the balances due from related parties were $89,536 and $93,372 included in current liabilities.
From time to time, the Company’s CEO paid expenses on behalf of the Company, and the Company funded certain expenses to the CEO. Additionally, the Company received its investments in JV I, JV II and JV III from the CEO. As of December 31, 2024 and 2023, the Company was owed $36,994 by the entities controlled by the Company’s CEO.
As of December 31, 2024 and 2023, the Company had accrued $42,500 and $90,000 respectively in cash compensation to the directors, included in accounts payable and other liabilities on the consolidated balance sheet.
No member of management has benefited from the transactions with related parties. The above transactions were not arms-length transactions.
NOTE 10 – NOTES PAYABLE
On January 4, 2024, the Company entered into the RevenueZen Note as part of the acquisition of RevenueZen. The RevenueZen Note has the principal sum of $440,000, matures on December 31, 2025, and interest on the outstanding principal balance of, and all other sums owing under the loan amount, is 11%. Upon the occurrence of an Event of Default (as defined in the RevenueZen Note), the interest rate automatically increases to the rate of 16% per annum. The loan amount is payable as follows: (i) commencing on the date that was thirty (30) days from the date of the RevenueZenNote and continuing monthly on such same day thereafter, the Company shall make an interest only payment equal to $4,033 per month and commencing on July 31, 2024 the Company shall make an interest only payment of $3,575 per month (ii) no later than June 30, 2024, the Company must make a payment of $50,000; and (iii) the entire loan amount, together with all accrued but unpaid interest thereon, shall be due and payable on December 31, 2025. As of December 31, 2024 the balance due on the RevenueZen Note was $390,000. The required $50,000 payment was made on July 2, 2024.
In January 2024, the Company entered into three separate promissory notes for aggregate principal of $250,000 and received cash proceeds of $250,000. The notes mature on the two year anniversary of the Company using the funds received for the acquisition of a business, which occurred in January 2024, and carry a 15% interest rate on the outstanding principal balance of, and all other sums owing under, the loan amounts of the notes. As of December 31, 2024 the balance due on the notes was $250,000.
| F-28 |
| Table of Contents |
On June 6, 2024, the Company entered into the DDS Rank Note as part of the acquisition of DDS Rank. The DDS Rank Note has the principal sum of $200,000, matures on June 6, 2026, and interest on the outstanding principal balance of, and all other sums owing under the loan amount, is 7%. The loan amount is payable as follows: (i) commencing on the date that was thirty (30) days from the date of the DDS Rank Note and continuing monthly on such same day thereafter, the Company shall make an interest only payment equal to $1,167 per month (ii) the entire loan amount, together with all accrued but unpaid interest thereon, shall be due and payable on June 6, 2026. As of December 31, 2024 the balance due on the DDS Rank Note was $200,000.
On October 1, 2024, the Company entered into the Eastern Standard Short Term Note as part of the acquisition of Eastern Standard. The Eastern Standard Short Term Note has the principal sum of $400,000, matures on February 1, 2025, and interest on the outstanding principal balance of, and all other sums owing under the loan amount, is 8%. The loan amount is payable as follows: (i) commencing on the date that was thirty (30) days from the date of the Eastern Standard Short Term Note and continuing monthly on such same day thereafter, the Company shall make an interest only payment equal to $2,667 per month (ii) the entire loan amount, together with all accrued but unpaid interest thereon, shall be due and payable on February 1, 2025. As of December 31, 2024, the balance due on the Eastern Standard Short Term Note was $400,000, which is classified under Notes payable – related parties, current on the balance sheet
In addition, on October 1, 2024, the Company entered into the Eastern Standard Note as part of the acquisition of Eastern Standard. The Eastern Standard Note has the principal sum of $850,000, matures on October 1, 2026, and interest on the outstanding principal balance of, and all other sums owing under the loan amount, is 8%. The loan amount is payable as follows: (i) commencing on the date that was thirty (30) days from the date of the Eastern Standard Note and continuing monthly on such same day thereafter, the Company shall make an interest only payment equal to $5,667 per month (ii) the entire loan amount, together with all accrued but unpaid interest thereon, shall be due and payable on October 1, 2026. As of December 31, 2024, the balance due on the Eastern Standard Note was $850,000, which is classified under Notes payable – related parties, current on the balance sheet
During the year ended December 31, 2024 the Company received proceeds of $200,000 under note payable agreements from OA SPV, a related party as described under Note 2. The notes are unsecured and mature three years from the date of the advances, which is April 1, 2027. On February 26, 2025 the notes payable was modified to bear a 15% interest rate, calculated on the outstanding principal amount. Interest shall accrue annually and be payable at the end of each fiscal quarter in accordance with the profitability and cash flow of the Borrower’s wholly-owned subsidiaries, as agreed upon by both parties. As of December 31, 2024, the Company has repaid $1,000 of the funds advanced.
At various times the Company enters into short-term financing agreements with payment service providers who provide cash proceeds. The Company will repay the principal balance based on a percentage of its daily sales processed through the service provider until the total principal is repaid, based on the repayment terms in the agreement which is generally less than one year. The following table shows the outstanding balances of these lenders as of December 31, 2024:
| Borrowing Entity |
| Origination Date |
| Interest rate |
|
| Original cash advanced |
|
| Balance as of December 31, 2024 |
| |||
| Proofread Anywhere |
| January 30, 2024 |
|
| 16.4 | % |
| $ | 100,000 |
|
| $ | - |
|
| Contentellect |
| June 29, 2024 |
|
| 14.9 | % |
| $ | 35,000 |
|
| $ | - |
|
| WPFolio |
| June 29, 2024 |
|
| 11.8 | % |
| $ | 32,900 |
|
| $ | - |
|
| Vital Reaction |
| June 30, 2024 |
|
| 11 | % |
| $ | 55,000 |
|
| $ | 2,287 |
|
| Onfolio Assets |
| July 1, 2014 |
|
| 19.89 | % |
| $ | 3,800 |
|
| $ | - |
|
| Onfolio Assets |
| August 31, 2024 |
|
| 19.89 | % |
| $ | 5,600 |
|
| $ | - |
|
| Proofread Anywhere |
| August 24, 2024 |
|
| 13.4 | % |
| $ | 250,000 |
|
| $ | 145,358 |
|
| Vital Reaction |
| October 31, 2024 |
|
| 13 | % |
| $ | 83,000 |
|
| $ | 83,000 |
|
| Onfolio Assets |
| November 5, 2024 |
|
| 16.8 | % |
| $ | 10,900 |
|
| $ | 9,111 |
|
| Contentellect |
| November 18, 2024 |
|
| 9.79 | % |
| $ | 44,700 |
|
| $ | 39,396 |
|
| SEO Butler |
| November 18, 2024 |
|
| 9.91 | % |
| $ | 21,650 |
|
| $ | 16,159 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total balance as of December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
| $ | 295,311 |
|
| F-29 |
| Table of Contents |
The following summarizes the Company’s maturities of debt instruments:
|
|
| Principal |
| |
| Fiscal year ended: |
|
|
| |
| December 31, 2025 |
| $ | 1,102,634 |
|
| December 31, 2026 |
|
| 1,300,000 |
|
| December 31, 2027 |
|
| 199,000 |
|
| December 31, 2028 |
|
| - |
|
| Total |
| $ | 2,601,634 |
|
NOTE 11 – DEFERRED REVENUE
Deferred revenue as of December 31, 2024 and 2023 consisted of the following:
|
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
| Website design and implementation |
| $ | 451,683 |
|
| $ | - |
|
| Website management |
|
| 72,237 |
|
|
| 99,257 |
|
| Advertising and content services |
|
| 65,993 |
|
|
| 50,708 |
|
| Total deferred revenue |
| $ | 589,913 |
|
| $ | 149,965 |
|
Changes in the balance of deferred revenue for the periods presented are as follows:
|
|
| Deferred Revenue |
| |
| Balance as of December 31, 2022 |
| $ | 113,251 |
|
| Billings for the period |
|
| 1,532,752 |
|
| Revenue recognized |
|
| (1,496,038 | ) |
| Balance as of December 31, 2023 |
|
| 149,965 |
|
| Billings for the period |
|
| 5,100,017 |
|
| Revenue recognized |
|
| (4,660,069 | ) |
| Balance as of December 31, 2024 |
| $ | 589,913 |
|
Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancelable contracts that will be invoiced and recognized as revenue in future periods ("backlog"). While deferred revenue is recorded on our balance sheet as a liability, backlog is not recorded in revenue, deferred revenue or elsewhere in our consolidated financial statements until we establish a contractual right to invoice, at which point it is recorded as revenue or deferred revenue as appropriate. As of December 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $589,913 in deferred revenue and $1,071,098 in backlog. As of December 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was $149,965 in deferred revenue and $0 in backlog
We expect that the amount of backlog relative to the total value of our contracts will change from year to year due to several factors, including the amount invoiced early in the contract term, the timing and duration of customer agreements, varying invoicing cycles of agreements and changes in customer financial circumstances. Accordingly, we believe that fluctuations in backlog are not always a reliable indicator of future revenues, and we do not utilize backlog internally as a key management metric.
| F-30 |
| Table of Contents |
NOTE 12 – CONTRACTS IN PROCESS
The net unbilled accounts receivables (deferred revenues) position for contracts in process, related to the website design and implementation services, consisted of the following:
|
|
| December 31, |
|
| December 31, |
| ||
|
|
| 2024 |
|
| 2023 |
| ||
| Costs on uncompleted contracts |
| $ | 624,865 |
|
| $ | - |
|
| Estimated earnings |
|
| 712,658 |
|
|
| - |
|
| Total costs and estimated profits on uncompleted contracts |
|
| 1,337,523 |
|
|
| - |
|
| Add: unbilled amounts on completed contracts |
|
| 7,000 |
|
|
| - |
|
| Less: Progress billings |
|
| (1,703,630 | ) |
|
| - |
|
| Unbilled accounts receivables (deferred revenues), net |
| $ | (359,107 | ) |
| $ | - |
|
The net asset (liability) position for contracts in process is included in the accompanying consolidated balance sheets as follows:
|
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
| Unbilled accounts receivable costs and estimated earnings in excess of billings on uncompleted contracts |
| $ | 92,576 |
|
| $ | - |
|
| Deferred revenues - Billings in excess of costs and estimated earnings on uncompleted contracts |
|
| (451,683 | ) |
|
| - |
|
| Unbilled accounts receivables (deferred revenues), net |
| $ | (359,107 | ) |
| $ | - |
|
NOTE 13 - INCOME TAXES
The Company is subject to United States federal income taxes at an approximate rate of 21%. The components of the income tax provision on the consolidated statements of operations is as follows:
|
|
| Year Ended |
|
| Year Ended |
| ||
|
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
| Current tax expense |
| $ | - |
|
| $ | - |
|
| Deferred tax expense (benefit) |
|
| - |
|
|
| - |
|
| Provision for income taxes, total |
| $ | - |
|
| $ | - |
|
The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:
|
|
| Year Ended |
|
| Year Ended |
| ||
|
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
|
|
|
|
|
| (Revised) |
| ||
| Income tax benefit computed at the statutory rate |
| $ | (372,528 | ) |
| $ | (1,921,514 | ) |
| Permanent differences |
|
| 227,771 |
|
|
| 1,320,693 |
|
| Net operating loss carryforwards |
|
| 144,757 |
|
|
| 600,821 |
|
| Temporary differences |
|
| - |
|
|
| - |
|
| penalties and interest |
|
| - |
|
|
| - |
|
| Provision for income taxes, current |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
| Temporary differences |
| $ | - |
|
| $ | - |
|
| Deferred tax provision (benefit) |
| $ | - |
|
| $ | - |
|
| F-31 |
| Table of Contents |
The Company has the following operating loss carry forwards.
|
|
| As of |
|
| As of |
| ||
|
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
| Net Operating loss carry forwards |
| $ | 1,399,231 |
|
| $ | 1,254,474 |
|
| Valuation allowance |
|
| (1,399,231 | ) |
|
| (1,254,474 | ) |
| Deferred tax assets |
| $ | - |
|
| $ | - |
|
NOTE 14 – CONTINGENCIES
In the ordinary course of business, the Company may become a party to lawsuits involving various matters. The impact and outcome of litigation, if any, is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. The Company believes the ultimate resolution of any such current proceeding will not have a material adverse effect on our continued financial position, results of operations or cash flows.
On October 3, 2022, the Company entered into an Asset Purchase Agreement (the “BWPS Asset Purchase Agreement”) with Hoang Huu Thinh, an individual (“Hoang” “Seller”). Pursuant to the BWPS Asset Purchase Agreement, the Company agreed to pay up to $60,000 in cash pursuant to certain earn-out provisions. The earn-out provision is for a period of three years after the closing (the "Earn-out Period" ends 10/3/2025), the Seller shall be eligible for two additional cash payments (together, the “Earn-out Payments”). The earn-out payments are earned if (a) If in any calendar month, the monthly gross revenue generated is $47,500 or more, then the Company shall pay the Seller a one-time payment of $30,000 (“Earn-out Payment 1”), payable within thirty days of the Earn-out Payment 1 being earned and (b) if during any calendar month, the monthly gross revenue generated is $52,000 or more, then the Company shall pay the Seller a one-time payment of $30,000 (“Earn-out Payment 2”), payable within thirty days of the Earn-out Payment 2 being earned. AS of December 31, 2024, no conditions of the earn-out provision have been met and no earn-out payments have been made.
On January 1, 2024, the Company entered into the RevenueZen Asset Purchase Agreement, and subject to the terms and conditions contained therein, at the closing, the Company agreed to pay additional earn-out payments that could be paid to RevenueZen pursuant to the earn-out formula described in the RevenueZen Asset Purchase Agreement.
The earn-out formula specifies for a period of one year, if the SDE (defined in Note 10 below) of the RevenueZen business exceeds $227,000, the sellers of RevenueZen Delaware would be entitled to receive an amount equal to three times the amount above $227,000 of SDE. SDE in this case is defined as gross revenue, less returns, discounts, and refunds and reduced by the cost of contractor payments, freelance copywriters, and payroll and benefits, consistent with the practices of the Seller in the operations of the Business, and for the sake of clarity exclude any payments, reimbursements, administrative charges, overhead charges, or other payments of any kind to the Buyer, Holdings, or any affiliate thereof. The earn-out amount will include 20% of any revenues of the Company that are from any customers of RevenueZen Delaware. The Company has the option to pay any earn-out amount in cash or in shares of preferred stock of the Company. At the time of the closing of the acquisition, the Company had estimated the fair value of the earn-out to be $986,000. As of December 31, 2024, pursuant to the terms and calculations of the earn-out provision, management has determined the final earn-out owed pursuant to the agreement is $680,662 resulting in a change in the fair value of the contingent consideration of $305,338. As of December 31, 2024, the earn-out amount has not been paid to the seller.
On April 1, 2024, the Company closed on its acquisition of certain customers from First Page, and subject to the terms and conditions contained therein, at the closing, the Company agreed to pay additional revenue share amount equal to 18% of gross revenues for the acquired customers for 3 years following the acquisition date. On the date of acquisition, the Company estimated the fair value of the revenue share to be $343,148. During the year ended December 31, 2024, the Company paid $59,093 to the seller of First Page pursuant to the revenue share provisions. As of December 31, 2024, the Company estimated the remaining obligations owed under the revenue share provisions to be $240,929 resulting in a change in the fair value of the continent consideration of $63,126.
| F-32 |
| Table of Contents |
NOTE 15 – SUBSEQUENT EVENTS
Management has evaluated events through April 15, 2025, the date these financial statements were available for issuance, and determined there were no events requiring disclosures, except as noted below.
During the year ended December 31, 2024 the Company received proceeds of $200,000 under note payable agreements from OA SPV, a related party as described under Note 2. The notes are unsecured and mature three years from the date of the advances, which is April 1, 2027. On February 26, 2025, the notes payable was modified to bear a 15% interest rate, calculated on the outstanding principal amount. Interest shall accrue annually and be payable at the end of each fiscal quarter in accordance with the profitability and cash flow of the Borrower’s wholly-owned subsidiaries, as agreed upon by both parties. The Company repaid $1,000 of the funds advanced.
On February 28, 2025, the Company and the RevenueZen sellers agreed to the final earn-out amount to be $682,000 and modified the payment terms to be paid with a cash payment of $72,000, $100,000 to be paid through profit sharing by using 30% of Net Operating Income, $100,000 in value for $79,240 stock options to purchase shares of common stock, $70,000 in Series A Preferred shares, and $340,000 in a promissory note. The promissory note, has a term of 60 months and accrues interest at 19%. The stock options have an exercise price of $1.34, have a term of 10 years, and are vested immediately.
| F-33 |
| Table of Contents |
| Onfolio Holdings Inc. | ||||||||
|
| ||||||||
|
|
| June 30, |
|
| December 31, |
| ||
|
|
| 2025 |
|
| 2024 |
| ||
| Assets |
| (Unaudited) |
|
|
| |||
|
|
|
|
|
|
|
| ||
| Current Assets: |
|
|
|
|
|
| ||
| Cash |
| $ | 514,259 |
|
| $ | 476,874 |
|
| Accounts receivable, net |
|
| 538,420 |
|
|
| 755,804 |
|
| Inventory |
|
| 29,540 |
|
|
| 65,876 |
|
| Prepaids and other current assets |
|
| 196,437 |
|
|
| 138,007 |
|
| Total Current Assets |
|
| 1,278,656 |
|
|
| 1,436,561 |
|
|
|
|
|
|
|
|
|
|
|
| Intangible assets, net |
|
| 2,720,986 |
|
|
| 3,323,211 |
|
| Goodwill |
|
| 4,203,145 |
|
|
| 4,210,557 |
|
| Fixed Assets, net |
|
| 4,279 |
|
|
| 5,135 |
|
| Due from related party |
|
| 130,804 |
|
|
| 126,530 |
|
| Investment in unconsolidated joint ventures, cost method |
|
| 213,007 |
|
|
| 213,007 |
|
| Investment in unconsolidated joint ventures, equity method |
|
| 268,998 |
|
|
| 268,231 |
|
| Other assets |
|
| 11,869 |
|
|
| 9,465 |
|
|
|
|
|
|
|
|
|
|
|
| Total Assets |
| $ | 8,831,744 |
|
| $ | 9,592,697 |
|
| Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current Liabilities: |
|
|
|
|
|
|
|
|
| Accounts payable and other current liabilities |
| $ | 965,797 |
|
| $ | 969,068 |
|
| Dividends payable |
|
| 98,800 |
|
|
| 100,797 |
|
| Notes payable, current |
|
| 462,810 |
|
|
| 312,634 |
|
| Notes payable – related parties, current |
|
| 425,965 |
|
|
| 790,000 |
|
| Contingent consideration |
|
| 267,034 |
|
|
| 981,591 |
|
| Deferred revenue |
|
| 339,730 |
|
|
| 589,913 |
|
| Total Current Liabilities |
|
| 2,560,136 |
|
|
| 3,744,003 |
|
|
|
|
|
|
|
|
|
|
|
| Notes payable |
|
| 732,329 |
|
|
| 450,000 |
|
| Notes payable - related parties |
|
| 1,049,000 |
|
|
| 1,049,000 |
|
| Total Liabilities |
|
| 4,341,465 |
|
|
| 5,243,003 |
|
|
|
|
|
|
|
|
|
|
|
| Commitments and Contingencies (Note 13) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stockholders' Equity: |
|
|
|
|
|
|
|
|
| Preferred stock, $0.001 per value, 5,000,000 shares authorized |
|
|
|
|
|
|
|
|
| Series A Preferred stock, $0.001 par value, 1,000,000 shares authorized, 170,460 and 134,460 issued and outstanding at June 30, 2025 and December 31, 2024, respectively |
|
| 170 |
|
|
| 134 |
|
| Common stock, $0.001 par value, 50,000,000 shares authorized, 5,127,395 issued and outstanding at June 30, 2025 and December 31, 2024 |
|
| 5,128 |
|
|
| 5,128 |
|
| Additional paid-in capital |
|
| 23,615,658 |
|
|
| 22,316,751 |
|
| Accumulated other comprehensive income |
|
| 88,145 |
|
|
| 68,105 |
|
| Accumulated deficit |
|
| (20,642,129 | ) |
|
| (19,078,287 | ) |
| Total Onfolio Inc. stockholders’ equity |
|
| 3,066,972 |
|
|
| 3,311,831 |
|
| Non-Controlling Interests |
|
| 1,423,307 |
|
|
| 1,037,863 |
|
| Total Stockholders' Equity |
|
| 4,490,279 |
|
|
| 4,349,694 |
|
|
|
|
|
|
|
|
|
|
|
| Total Liabilities and Stockholders' Equity |
| $ | 8,831,744 |
|
| $ | 9,592,697 |
|
The accompanying notes are an integral part of these unaudited consolidated financial statements
| F-34 |
| Table of Contents |
| Onfolio Holdings Inc. | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
| For the Three Months Ended June 30, |
|
| For the Six Months Ended June 30, |
| ||||||||||
|
|
| 2025 |
|
| 2024 |
|
| 2025 |
|
| 2024 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Revenue, services |
| $ | 2,062,603 |
|
| $ | 993,166 |
|
| $ | 3,859,198 |
|
| $ | 1,716,717 |
|
| Revenue, product sales |
|
| 1,085,606 |
|
|
| 733,433 |
|
|
| 2,100,954 |
|
|
| 1,596,784 |
|
| Total Revenue |
|
| 3,148,209 |
|
|
| 1,726,599 |
|
|
| 5,960,152 |
|
|
| 3,313,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenue, services |
|
| 1,074,065 |
|
|
| 557,518 |
|
|
| 2,086,349 |
|
|
| 924,224 |
|
| Cost of revenue, product sales |
|
| 135,867 |
|
|
| 193,650 |
|
|
| 228,406 |
|
|
| 409,510 |
|
| Total cost of revenue |
|
| 1,209,932 |
|
|
| 751,168 |
|
|
| 2,314,755 |
|
|
| 1,333,734 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
|
| 1,938,277 |
|
|
| 975,431 |
|
|
| 3,645,397 |
|
|
| 1,979,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative |
|
| 2,066,796 |
|
|
| 1,351,655 |
|
|
| 4,288,142 |
|
|
| 2,536,839 |
|
| Professional fees |
|
| 345,741 |
|
|
| 221,255 |
|
|
| 583,646 |
|
|
| 401,445 |
|
| Acquisition costs |
|
| 32,263 |
|
|
| 8,946 |
|
|
| 65,673 |
|
|
| 103,287 |
|
| Total operating expenses |
|
| 2,444,800 |
|
|
| 1,581,856 |
|
|
| 4,937,461 |
|
|
| 3,041,571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from operations |
|
| (506,523 | ) |
|
| (606,425 | ) |
|
| (1,292,064 | ) |
|
| (1,061,804 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Equity method income (loss) |
|
| (142 | ) |
|
| (1,063 | ) |
|
| 767 |
|
|
| (6,217 | ) |
| Dividend income |
|
| 7,671 |
|
|
| - |
|
|
| 9,921 |
|
|
| - |
|
| Interest income (expense), net |
|
| (72,602 | ) |
|
| (22,718 | ) |
|
| (173,322 | ) |
|
| (40,438 | ) |
| Change in fair value of contingent consideration |
|
| 16,539 |
|
|
| - |
|
|
| 70,712 |
|
|
| - |
|
| Other income |
|
| 20,746 |
|
|
| 1,163 |
|
|
| 25,729 |
|
|
| 1,590 |
|
| Total other income |
|
| (27,788 | ) |
|
| (22,618 | ) |
|
| (66,193 | ) |
|
| (45,065 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss before income taxes |
|
| (534,311 | ) |
|
| (629,043 | ) |
|
| (1,358,257 | ) |
|
| (1,106,869 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income tax (provision) benefit |
|
| (128 | ) |
|
| - |
|
|
| 17,390 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
| (534,439 | ) |
|
| (629,043 | ) |
|
| (1,340,867 | ) |
|
| (1,106,869 | ) |
| Net loss attributable to noncontrolling interest |
|
| (35,165 | ) |
|
| 1,254 |
|
|
| (23,124 | ) |
|
| 1,918 |
|
| Net loss attributable to Onfolio Holdings Inc. |
|
| (569,604 | ) |
|
| (627,789 | ) |
|
| (1,363,991 | ) |
|
| (1,104,951 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred Dividends |
|
| (95,930 | ) |
|
| (84,468 | ) |
|
| (199,851 | ) |
|
| (166,113 | ) |
| Net loss to common shareholders |
| $ | (665,534 | ) |
| $ | (712,257 | ) |
| $ | (1,563,842 | ) |
| $ | (1,271,064 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss per common shareholder |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted |
| $ | (0.13 | ) |
| $ | (0.14 | ) |
| $ | (0.30 | ) |
| $ | (0.25 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted |
|
| 5,127,395 |
|
|
| 5,109,373 |
|
|
| 5,127,395 |
|
|
| 5,108,384 |
|
The accompanying notes are an integral part of these unaudited consolidated financial statements
| F-35 |
| Table of Contents |
| Onfolio Holdings Inc. | ||||||||||||||||||||||||||||||||||||
| For the Three and Six Months Ended June 30, 2025 and 2024 | ||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
| Preferred Stock, $0.001 Par value |
|
| Common Stock, $0.001 Par Value |
|
| Additional Paid-In |
|
| Accumulated |
|
| Accumulated Other Comprehensive |
|
| Non controlling |
|
| Stockholders' |
| |||||||||||||||
|
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Income |
|
| Interest |
|
| Equity |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
| Balance, December 31, 2024 |
|
| 134,460 |
|
| $ | 134 |
|
|
| 5,127,395 |
|
| $ | 5,128 |
|
| $ | 22,316,751 |
|
| $ | (19,078,287 | ) |
| $ | 68,105 |
|
| $ | 1,037,863 |
|
| $ | 4,349,694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Sale of preferred stock for cash |
|
| 28,000 |
|
|
| 28 |
|
|
| - |
|
|
| - |
|
|
| 699,972 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 700,000 |
|
| Preferred stock and common stock options issued for payment of contingent consideration |
|
| 2,800 |
|
|
| 3 |
|
|
| - |
|
|
| - |
|
|
| 169,997 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 170,000 |
|
| Stock-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 272,930 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 272,930 |
|
| Non-controlling interest investment for payment of note payable |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 400,000 |
|
|
| 400,000 |
|
| Preferred dividends |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (103,921 | ) |
|
| - |
|
|
| - |
|
|
| (103,921 | ) |
| Foreign currency translation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 29,047 |
|
|
| - |
|
|
| 29,047 |
|
| Distributions to non-controlling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (17,820 | ) |
|
| (17,820 | ) |
| Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (794,387 | ) |
|
| - |
|
|
| (12,041 | ) |
|
| (806,428 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, March 31, 2025 |
|
| 165,260 |
|
| $ | 165 |
|
|
| 5,127,395 |
|
| $ | 5,128 |
|
| $ | 23,459,650 |
|
| $ | (19,976,595 | ) |
| $ | 97,152 |
|
| $ | 1,408,002 |
|
| $ | 4,993,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Sale of preferred stock for cash |
|
| 5,200 |
|
|
| 5 |
|
|
| - |
|
|
| - |
|
|
| 129,995 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 130,000 |
|
| Stock-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 26,013 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 26,013 |
|
| Preferred dividends |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (95,930 | ) |
|
| - |
|
|
| - |
|
|
| (95,930 | ) |
| Foreign currency translation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (9,007 | ) |
|
| - |
|
|
| (9,007 | ) |
| Distributions to non-controlling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (19,860 | ) |
|
| (19,860 | ) |
| Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (569,604 | ) |
|
| - |
|
|
| 35,165 |
|
|
| (534,439 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, June 30, 2025 |
|
| 170,460 |
|
| $ | 170 |
|
|
| 5,127,395 |
|
| $ | 5,128 |
|
| $ | 23,615,658 |
|
| $ | (20,642,129 | ) |
| $ | 88,145 |
|
| $ | 1,423,307 |
|
| $ | 4,490,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, December 31, 2023 |
|
| 92,260 |
|
| $ | 93 |
|
|
| 5,107,395 |
|
| $ | 5,108 |
|
| $ | 21,107,311 |
|
| $ | (16,957,854 | ) |
| $ | 182,465 |
|
| $ | - |
|
| $ | 4,337,123 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Acquisition of Business |
|
| 17,000 |
|
|
| 17 |
|
|
| - |
|
|
| - |
|
|
| 484,983 |
|
|
| - |
|
|
| - |
|
|
| 126,000 |
|
|
| 611,000 |
|
| Sale of preferred stock for cash |
|
| 400 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 10,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 10,000 |
|
| Stock-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 17,887 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 17,887 |
|
| Preferred dividends |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (81,645 | ) |
|
| - |
|
|
| - |
|
|
| (81,645 | ) |
| Foreign currency translation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (39,134 | ) |
|
| - |
|
|
| (39,134 | ) |
| Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (477,162 | ) |
|
| - |
|
|
| (664 | ) |
|
| (477,826 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, March 31, 2024 |
|
| 109,660 |
|
| $ | 110 |
|
|
| 5,107,395 |
|
| $ | 5,108 |
|
| $ | 21,620,181 |
|
| $ | (17,516,661 | ) |
| $ | 143,331 |
|
| $ | 125,336 |
|
| $ | 4,377,405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Acquisition of Business |
|
| 8,000 |
|
|
| 8 |
|
|
| - |
|
|
| - |
|
|
| 199,992 |
|
|
| - |
|
|
| - |
|
|
| 200,000 |
|
|
| 400,000 |
|
| Stock-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 27,510 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 27,510 |
|
| Common stock issued for exercise of options |
|
| - |
|
|
| - |
|
|
| 20,000 |
|
|
| 20 |
|
|
| (20 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| Preferred dividends |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (84,468 | ) |
|
| - |
|
|
| - |
|
|
| (84,468 | ) |
| Foreign currency translation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 15,778 |
|
|
| - |
|
|
| 15,778 |
|
| Distribution to non-controlling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (3,600 | ) |
|
| (3,600 | ) |
| Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (627,789 | ) |
|
| - |
|
|
| (1,254 | ) |
|
| (629,043 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, June 30, 2024 |
|
| 117,660 |
|
| $ | 118 |
|
|
| 5,127,395 |
|
| $ | 5,128 |
|
| $ | 21,847,663 |
|
| $ | (18,228,918 | ) |
| $ | 159,109 |
|
| $ | 320,482 |
|
| $ | 4,103,582 |
|
The accompanying notes are an integral part of these unaudited consolidated financial statements
| F-36 |
| Table of Contents |
| Onfolio Holdings Inc. | ||||||||
| For the Six Months Ended June 30, 2025 and 2024 | ||||||||
| (Unaudited) | ||||||||
|
|
|
|
|
|
| |||
|
|
| 2025 |
|
| 2024 |
| ||
| Cash Flows from Operating Activities |
|
|
|
|
|
| ||
| Net loss |
| $ | (1,340,867 | ) |
| $ | (1,106,869 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
| Stock-based compensation expense |
|
| 298,943 |
|
|
| 45,397 |
|
| Equity method (income)/loss |
|
| (767 | ) |
|
| 6,217 |
|
| Amortization of intangible assets |
|
| 602,225 |
|
|
| 250,437 |
|
| Depreciation expense |
|
| 856 |
|
|
| - |
|
| Change in fair value of contingent consideration |
|
| (70,712 | ) |
|
| - |
|
| Net change in: |
|
|
|
|
|
|
|
|
| Accounts receivable |
|
| 217,384 |
|
|
| (174,807 | ) |
| Inventory |
|
| 36,336 |
|
|
| 8,051 |
|
| Prepaids and other current assets |
|
| (60,834 | ) |
|
| (53,532 | ) |
| Accounts payable and other current liabilities |
|
| (3,271 | ) |
|
| 209,661 |
|
| Due to joint ventures |
|
| (4,274 | ) |
|
| 29,653 |
|
| Deferred revenue |
|
| (250,183 | ) |
|
| 22,045 |
|
| Net cash used in operating activities |
|
| (575,164 | ) |
|
| (763,747 | ) |
|
|
|
|
|
|
|
|
|
|
| Cash Flows from Investing Activities |
|
|
|
|
|
|
|
|
| Cash paid for cost method investments |
|
| - |
|
|
| (49,000 | ) |
| Cash paid to acquire businesses |
|
| - |
|
|
| (255,000 | ) |
|
|
|
|
|
|
|
|
|
|
| Net cash used in investing activities |
|
| - |
|
|
| (304,000 | ) |
|
|
|
|
|
|
|
|
|
|
| Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
| Proceeds from sale of Series A preferred stock |
|
| 830,000 |
|
|
| 10,000 |
|
| Payments of preferred dividends |
|
| (201,848 | ) |
|
| (151,035 | ) |
| Distributions to non-controlling interest holders |
|
| (37,680 | ) |
|
| (3,600 | ) |
| Proceeds from notes payable |
|
| 358,800 |
|
|
| 417,900 |
|
| Payments on note payables |
|
| (266,295 | ) |
|
| (56,516 | ) |
| Proceeds from notes payable – related parties |
|
| 35,965 |
|
|
| 200,000 |
|
| Payments on note payables – related parties |
|
| - |
|
|
| (1,000 | ) |
| Payments on contingent consideration |
|
| (133,845 | ) |
|
| - |
|
| Net cash provided by financing activities |
|
| 585,097 |
|
|
| 415,749 |
|
|
|
|
|
|
|
|
|
|
|
| Effect of foreign currency translation |
|
| 27,452 |
|
|
| (20,238 | ) |
|
|
|
|
|
|
|
|
|
|
| Net Change in Cash |
|
| 37,385 |
|
|
| (672,236 | ) |
| Cash, Beginning of Period |
|
| 476,874 |
|
|
| 982,261 |
|
|
|
|
|
|
|
|
|
|
|
| Cash, End of Period |
| $ | 514,259 |
|
| $ | 310,025 |
|
|
|
|
|
|
|
|
|
|
|
| Cash Paid For: |
|
|
|
|
|
|
|
|
| Income Taxes |
| $ | - |
|
| $ | - |
|
| Interest |
| $ | 122,733 |
|
| $ | 41,700 |
|
|
|
|
|
|
|
|
|
|
|
| Supplemental Non-cash Disclosures |
|
|
|
|
|
|
|
|
| Preferred dividends accrued |
| $ | 199,851 |
|
| $ | 166,113 |
|
| Promissory notes issued for acquisitions |
| $ | - |
|
| $ | 640,000 |
|
| Preferred stock issued for acquisitions |
| $ | - |
|
| $ | 625,000 |
|
| Common stock issued for acquisition |
| $ | - |
|
| $ | 60,000 |
|
| Non-controlling interest issued for acquisition |
| $ | - |
|
| $ | 126,000 |
|
| Contingent consideration issued for acquisition |
| $ | - |
|
| $ | 1,869,000 |
|
| Settlement of contingent consideration for note payable, preferred stock and stock options |
| $ | 510,000 |
|
| $ | - |
|
| Non-controlling interest issued for settlement of note payable |
| $ | 400,000 |
|
| $ | - |
|
| Common stock issued for exercise of stock options |
| $ | - |
|
| $ | 20 |
|
The accompanying notes are an integral part of these unaudited consolidated financial statements
| F-37 |
| Table of Contents |
ONFOLIO HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2024
(UNAUDITED)
NOTE 1 – NATURE OF BUSINESS AND ORGANIZATION
Onfolio Holdings Inc. (“Company”) was incorporated on July 20, 2020 under the laws of Delaware to acquire and develop high-growth and profitable internet businesses. The Company primarily earns revenue through website management, advertising, and content placement on its online businesses, and product sales on certain sites. The Company owns multiple online businesses and manages online businesses on behalf of certain unconsolidated entities in which it holds equity interests. As described in “Note 4 –Segments Information”, we operate in two business segments: Business to Business (“B2B”) and Business to Consumer (“B2C”).
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (the “SEC”). The Company’s fiscal year end is December 31. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the period presented. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K as filed with the SEC on April 16, 2025 (the “Annual Report”). As previously disclosed in the Annual Report for the year ended December 31, 2024, the Company identified certain errors in its previously issued unaudited consolidated financial statements. The Company assessed the materiality of the errors on all prior period financial statements and concluded they were not material to any prior annual or interim periods. The Company corrected these errors by revising its unaudited interim financial information for the three and six months ended June 30, 2024 to correct for the impact of such errors. Refer to Note 1 of the Company’s Annual Report for additional discussion of the errors and related error corrections on the unaudited quarterly financial statements. The interim results for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any future periods.
The consolidated financial statements of the Company include the accounts of its wholly owned subsidiaries and other controlled entities. The Company’s wholly-owned subsidiaries are Onfolio LLC, Vital Reaction, LLC, Mighty Deals LLC, Onfolio Assets, LLC, Onfolio Management, LLC, WP Folio, LLC, Proofread Anywhere, LLC, Contentellect, LLC, SEO Butler Limited, Pace Generative LLC, and DealPipe, LLC. The Company also maintains majority ownership in DDS Rank, LLC, RevenueZen, LLC, and Eastern Standard, LLC which are owned 66%, 88%, and 53% respectively, by the Company as of June 30, 2025. All intercompany transactions and balances have been eliminated in consolidation.
Foreign Currency Translation
The Company, and the majority of its subsidiaries, maintain their accounting records in U.S. Dollars. The Company’s operating subsidiary, SEO Butler, is located in the United Kingdom and maintains its accounting records in British Pounds, which is its functional currency. Assets and liabilities of the subsidiary are translated into U.S. dollars at exchange rates at the balance sheet date, equity accounts are translated at historical exchange rate and revenues and expenses are translated by using the average exchange rates for the period. Translation adjustments are reported as a separate component of other comprehensive income (loss) in the consolidated statements of operations and comprehensive loss. Foreign currency denominated transactions are translated at exchange rates approximating those in effect at the transaction dates.
| F-38 |
| Table of Contents |
Investment in Unconsolidated Entities – Equity and Cost Method Investments
We account for our interests in entities in which we are able to exercise significant influence over operating and financial policies, generally 50% or less ownership interest, under the equity method of accounting. In such cases, our original investments are recorded at cost and adjusted for our share of earnings, losses and distributions. We account for our interests in entities where we have virtually no influence over operating and financial policies under the cost method of accounting. In such cases, our original investments are recorded at the cost to acquire the interest and any distributions received are recorded as income. Our investments in Onfolio JV I, LLC (“JV I”), Onfolio JV II, LLC (“JV II”) and Onfolio JV III, LLC (“JV III”) are accounted for under the cost method. All investments are subject to our impairment review policy. The Company recognized the value of its investments in these joint ventures at carryover basis based on the amount paid by the CEO to the joint venture for Onfolio JV 1 LLC, and agreed to pay the joint venture the contribution for Onfolio JV II LLC and Onfolio JV III LLC at the carryover basis for the amount the interest was acquired for by the CEO.
The current investment in unconsolidated affiliates accounted for under the equity method consists of a 35.8% interest in Onfolio JV IV, LLC (“JV IV”), which is involved in the acquisition, development and operation of websites to produce advertising revenue. The initial value of an investment in an unconsolidated affiliate accounted for under the equity method is recorded at the fair value of the consideration paid.
Variable Interest Entities
Variable interest entities (“VIEs”) are consolidated when the investor is the primary beneficiary. A primary beneficiary is the variable interest holder in a VIE with both the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and the obligation to absorb losses, or the right to receive benefits that could potentially be significant to the VIE. Management concluded that the joint ventures do not qualify as variable interest entities under the requirements of ASC 810, as the joint ventures 1) have sufficient equity to finance its activities; 2) have equity owners that as a group have the characteristics of a controlling financial interest in the business, through the ability to vote on a majority basis to change the managing member of the respective joint ventures, and 3) are structured with substantive voting rights. The Company accounts for its investments in the joint ventures under either the cost or equity method based on the equity ownership in each entity.
The Company, through its subsidiary Onfolio Management LLC, is the manager of Onfolio Agency SPV, LLC (“OA SPV”), and Onfolio Agency SPV 2, LLC (“OA SPV 2”), collectively referred to as “OA SPVs”. The Company does not hold any equity interest in OA SPVs, but will receive 10% of any cash distributions paid by OA SPV, and 20% of any cash distributions paid by OA SPV 2, to its members, when declared, as the management fee. The Company can be removed as manager of OA SPVs through a unanimous vote of the members. The Company determined that the fees it may receive for its role as manager do not constitute a variable interest in OA SPVs and will be accounted for as a revenue contract under ASC 606.
The Company, through its subsidiary RevenueZen, LLC, is the manager of CliAcquire, LLC (“CliAcquire”). The Company holds a 5% members interest in CliAcquire and will receive profit distributions based on its membership interest. The Company can be removed as manager of CliAcquire through a supermajority vote of the members. The Company determined that the investment in CliAcquire will be accounted for as a cost method investment.
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 at the date of the balance sheet. The Company uses significant judgements when making estimates related to the assessment of control over variable interest entities, valuation of deferred tax assets and impairment of long lived assets. Actual results could differ from those estimates.
| F-39 |
| Table of Contents |
Cash and Cash Equivalent
Cash and cash equivalents include cash on hand, demand deposits with banks and liquid investments with an original maturity of three months or less.
Inventories
Inventories are stated at the lower of actual cost or net realizable value. Cost is determined by using the first-in, first-out (FIFO) method.
Goodwill and Other Intangibles
The Company accounts for goodwill in a purchase business combination as the excess of the cost over the estimated fair value of net assets acquired. Business combinations can also result in the recognition of other intangible assets. Amortization of intangible assets, if applicable, occurs over their estimated useful lives. Goodwill, which is not amortized, is tested for impairment on an annual basis (or an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value). When testing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company elects to perform a qualitative assessment and determines that an impairment is more likely than not, then performance of the quantitative impairment test is required. The quantitative assessment is performed to estimate the fair value of a reporting unit. To determine the reasonableness of the estimated fair values, the Company reviews the assumptions to determine that neither the income approach nor the market approach provides significantly different valuations. If the estimated fair value exceeds the carrying value, no further work is required and no impairment loss is recognized. If the carrying value exceeds the estimated fair value, a non-cash impairment loss is recognized in the amount of that excess.
When performing the quantitative assessment, key assumptions used in the income approach are updated when the analysis is performed for each reporting unit. The assumptions that have the most significant effect on the fair value calculations are the projected revenue growth rates, future operating margins, discount rates, and terminal values. While the Company uses reasonable and timely information to prepare its discounted cash flow analysis, actual future cash flows or market conditions could differ significantly and could result in future impairment charges related to recorded goodwill balances.
Recently acquired reporting units generally represent a higher inherent risk of impairment, which typically decreases as the businesses are integrated into the enterprise. Negative industry or economic trends, disruptions to its business, actual results significantly below expected results, unexpected significant changes or planned changes in the use of the assets, divestitures, and market capitalization declines may have a negative effect on the fair value of the Company's reporting units.
Indefinite lived intangible assets are not amortized, but are separately tested for impairment during the fourth quarter of the fiscal year or on an interim basis if an event occurs that indicates the fair value is more likely than not below the carrying value. The Company first qualitatively assesses whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of an indefinite-lived trade name is less than its carrying amount. If necessary, the Company conducts a quantitative assessment using the relief-from-royalty method. This methodology assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these assets. To the extent the Company determines a fair value, the inputs used represent a Level 3 fair value measurement in the FASB fair value hierarchy given that the inputs are unobservable. The assumptions that have the most significant effect on the fair value calculations are the royalty rates, projected revenue growth rates, discount rates, and terminal values. The royalty rate is determined based on the profitability of the trade name to which it relates and observed market royalty rates. Revenue growth rates are determined after considering current and future economic conditions, recent sales trends, or other variables.
The assessment of fair value for impairment purposes requires significant judgments to be made by management. Although forecasts are based on assumptions that are considered reasonable by management and consistent with the plans and estimates management uses to operate the underlying businesses, there is significant judgment in estimating future operating results. Changes in estimates or the application of alternative assumptions could produce significantly different results.
| F-40 |
| Table of Contents |
The Company evaluates whether there has been an impairment of identifiable intangible assets with definite useful economic lives, or of the remaining life of such assets, when certain indicators of impairment are present. In the event that facts and circumstances indicate that the cost or remaining period of amortization of any asset may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future gross, undiscounted cash flows associated with the asset would be compared to the asset’s carrying amount to determine if a write-down to fair value or a revision in the remaining amortization period is required.
Long-lived Assets
The Company amortizes acquired definite-lived intangible assets over their estimated useful lives. Other indefinite-lived intangible assets are not amortized but subject to annual impairment tests. In accordance with ASC 360 “Property Plant and Equipment,” the Company reviews the carrying value of intangibles subject to amortization and long-lived assets for impairment throughout the year or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of long-lived assets is measured by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any, exceeds its fair market value.
Revenue Recognition
The Company follows the guidance of the FASB ASC 606, Revenue from Contracts with Customers to all contracts using the modified retrospective method.
Revenue is recognized based on the following five step model:
| - | Identification of the contract with a customer |
| - | Identification of the performance obligations in the contract |
| - | Determination of the transaction price |
| - | Allocation of the transaction price to the performance obligations in the contract |
| - | Recognition of revenue when, or as, the Company satisfies a performance obligation |
The Company primarily earns revenue through website management, digital services, advertising and content placement on its online businesses, product sales, and digital product sales. Management services revenue is earned and recognized on a monthly basis as the services are provided. Advertising and content revenue is earned and recognized once the content is presented on the Company’s sites in accordance with the customer requirements. Product sales are recognized at the time the product is shipped to the customer. In certain circumstances, products are shipped directly by a supplier to the end customer at the Company’s request. The Company determined that it is the primary obligor in these contracts due to being responsible for fulfilling the customer contract, establishing pricing with the customer, and taking on credit risk from the customer. The Company recognizes revenue from these contracts with customers on a gross basis. Digital product sales represent electronic content that is transferred to the customer at time of purchase. The Company also earns revenue from online course subscriptions that may have monthly or annual subscriptions. In circumstances when a customer purchases an annual subscription upfront, the Company defers the revenue until the performance obligation has been satisfied.
The revenue from our Eastern Standard subsidiary is derived from website design and implementation contracts and typically span between 4 to 12 months. These contracts continuously transfer control to the customer as all of the work is completed electronically and is transferable to the customer at any point in time. Contract costs include labor, materials, and indirect costs.
We have numerous contracts that are in various stages of completion which require estimates to determine the forecasted costs at completion. Due to the nature of the work left to be performed on many of our contracts, the estimation of total cost at completion for fixed-price contracts is complex, subject to many variables and requires significant judgment. Estimates of total cost at completion are made each period and changes in these estimates are accounted for prospectively as cumulative adjustments to revenue recognized in the current period. If estimates of costs to complete fixed-price contracts indicate a loss, a provision is made through a contract write-down for the total loss anticipated.
| F-41 |
| Table of Contents |
Contract modifications are routine in the performance of our contracts. Contracts are often modified to account for changes in the contract specifications or requirements. In most instances, contract modifications are for goods or services that are not distinct, and, therefore, are accounted for as part of the existing contract.
The following table presented disaggregated revenue information for the three and six months ended June 30, 2025 and 2024:
|
|
| For the Three Months ended June 30, |
|
| For the Six Months ended June 30, |
| ||||||||||
|
|
| 2025 |
|
| 2024 |
|
| 2025 |
|
| 2024 |
| ||||
| Website management |
| $ | 1,274,529 |
|
| $ | 24,000 |
|
| $ | 2,215,994 |
|
| $ | 48,000 |
|
| Advertising and content revenue |
|
| 788,074 |
|
|
| 969,166 |
|
|
| 1,643,204 |
|
|
| 1,668,717 |
|
| Product sales |
|
| 121,629 |
|
|
| 149,288 |
|
|
| 209,157 |
|
|
| 314,226 |
|
| Digital Product Sales |
|
| 963,977 |
|
|
| 584,145 |
|
|
| 1,891,797 |
|
|
| 1,282,558 |
|
| Total revenue |
| $ | 3,148,209 |
|
| $ | 1,726,599 |
|
| $ | 5,960,152 |
|
| $ | 3,313,501 |
|
The Company does not have any single customer that accounted for greater than 10% of revenue during the three and six months ended June 30, 2025 and 2024.
Cost of Revenue
Cost of product revenue consists primarily of costs associated with the acquisition and shipment of products being sold through the Company’s online marketplaces.
Cost of Service revenue which includes website content creation costs including contract labor, domain and hosting costs and certain software costs related to website operations.
Net Income (Loss) Per Share
In accordance with ASC 260 “Earnings per Share,” basic net loss per common share is computed by dividing net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of common and common equivalent shares, including 781,860 stock options and 6,199,863 warrants, outstanding during the period. Such common equivalent shares have not been included in the computation of net loss per share as their effect would be anti-dilutive.
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, which requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.
Fair Value of Financial Instruments
The carrying value of short-term instruments, including cash, accounts payable and accrued expenses, and notes payable approximate fair value due to the relatively short period to maturity for these instruments.
| F-42 |
| Table of Contents |
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a three-level valuation hierarchy for disclosures of fair value measurements, defined as follows:
Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.
Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value.
The Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis.
Stock-Based Compensation
Accounting Standards Codification (“ASC”) 718, “Accounting for Stock-Based Compensation” established financial accounting and reporting standards for stock-based compensation plans. It defines a fair value-based method of accounting for an employee stock option or similar equity instrument. Accordingly, employee share-based payment compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. The valuation of employee stock options is an inherently subjective process, since market values are generally not available for long-term, non-transferable employee stock options. Accordingly, the Black-Scholes option pricing model is utilized to derive an estimated fair value. The Black-Scholes pricing model requires the consideration of the following six variables for purposes of estimating fair value.
Expected Dividends. We have never declared or paid any cash dividends on our common stock and do not expect to do so in the foreseeable future. Accordingly, we use an expected dividend yield of zero to calculate the grant-date fair value of a stock option.
Expected Volatility. The expected volatility is a measure of the amount by which our stock price is expected to fluctuate during the expected term of options granted. We determine the expected volatility solely based upon the historical volatility of a peer group of companies of similar size and with similar operations.
Risk-Free Interest Rate. The risk-free interest rate is the implied yield available on U.S. Treasury zero-coupon issues with a remaining term equal to the option’s expected term on the grant date.
Expected Term. The expected life of stock options granted is based on the actual vesting date and the end of the contractual term.
Stock Option Exercise Price and Grant Date Price of Common Stock. Currently the Company utilizes the most recent cash sale closing price of its common stock as the most reasonable indication of fair value.
The Company accounts for compensation cost for stock option plans and for share based payments to non-employees in accordance with ASC 505, “Accounting for Equity Instruments Issued to Non-Employees for Acquiring, or in Conjunction with Selling, Goods or Services”. Share-based awards to non-employees are expensed over the period in which the related services are rendered at their fair value.
| F-43 |
| Table of Contents |
Segment Reporting
The Company manages its operations under two segments for the purpose of assessing performance and making operating decisions – Business to Business (“B2B”) and Business to Consumer (“B2C)”. The Company’s Chief Operating Decision Maker (“CODM”) is its executive management committee. The CODM allocates resources and evaluates the performance of the Company using information about combined net income from operations. All significant operating decisions are based upon an analysis of the Company as two operating segments, which are the same as its reporting segments.
Advertising
The Company expenses advertising costs as they are incurred. Advertising costs were $1,395,026 and $676,726 for the six months ended June 30, 2025 and 2024, respectively.
Reclassifications
Certain reclassifications have been made to our prior year’s consolidated financial statements to conform to our current year presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit.
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands the disclosures required for income taxes. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment should be applied on a prospective basis while retrospective application is permitted. The Company adopted this standard effective January 1, 2025, which did not have a material impact on the Company’s consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, and in January 2025, the FASB issued ASU 2025-01, Clarifying the Effective Date (“ASU 2025-01”). The amendments are intended to enhance disclosures regarding an entity’s costs and expenses by requiring additional disaggregated information disclosures about certain income statement expense line items. The amendments, as clarified by ASU 2025-01, are effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the effect of this pronouncement on its disclosures.
NOTE 3 – GOING CONCERN
These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At June 30, 2025, the Company had not yet achieved consistent profitable operations and expects to incur further losses in the development of its business, all of which raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity or debt financing and/or related party advances. However, there is no assurance of additional funding being available.
NOTE 4 – SEGMENT INFORMATION
The Company manages its operations under two segments for the purpose of assessing performance and making operating decisions – Business to Business (“B2B”) and Business to Consumer (“B2C)”. The Company’s Chief Operating Decision Maker (“CODM”) is our Chief Executive Officer (CEO). The CODM allocates resources and evaluates the performance of the Company using information about combined net income from operations. All significant operating decisions are based upon an analysis of the Company as two operating segments, which are the same as its reporting segments.
| F-44 |
| Table of Contents |
We operate in two business segments: B2B and B2C. We organize our business segments based on the nature of products and services offered, and the economic characteristics of each segment. Following is a brief description of the activities of our business segments.
B2B
Our B2B segment includes the results of operations of Eastern Standard, RevenueZen, DDS Rank, SEO Butler, Contentellect, Pace Generative, and DealPipe. These entities share similar characteristics such as customers being businesses, and being primarily service-related revenue.
B2C
Our B2C segment includes the results of operations of Proofread Anywhere, Mighty Deals, and Vital Reaction. These entities share characteristics such as the end customers being individual consumers, and sales being more focused on product sales, including digital sales.
Selected Financial Data by Business Segment
Net sales and operating profit of the Company’s business segments exclude intersegment sales, cost of sales and profit as these activities are eliminated in consolidation and thus are not included in management’s evaluation of performance of each segment. Our Chief Executive Officer (CEO) serves as our Chief Operating Decision Maker (CODM) and is responsible for reviewing segment performance and making decisions regarding resource allocation. Our CODM evaluates each segment’s performance based on metrics such as net sales, operating profit, and other key financial indicators, guiding strategic decisions to align with company-wide goals. Business segment operating profit includes the Company’s share of earnings or losses from equity method investees as the operating activities of the equity method investees are closely aligned with the operations of its business segments.
Summary Operating Results
Sales, cost of sales and operating profit for each of our business segments were as follows:
|
|
| For the Three Months Ended June 30, 2025 |
| |||||||||||||
|
|
| B2B |
|
| B2C |
|
| CORPORATE |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Revenue, services |
| $ | 1,974,771 |
|
| $ | 87,832 |
|
| $ | - |
|
| $ | 2,062,603 |
|
| Revenue, product sales |
|
| - |
|
|
| 1,085,606 |
|
|
| - |
|
|
| 1,085,606 |
|
| Total Revenue |
|
| 1,974,771 |
|
|
| 1,173,438 |
|
|
| - |
|
|
| 3,148,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenue, services |
|
| 1,052,778 |
|
|
| 16,711 |
|
|
| - |
|
|
| 1,069,489 |
|
| Cost of revenue, product sales |
|
| - |
|
|
| 140,443 |
|
|
| - |
|
|
| 140,443 |
|
| Total cost of revenue |
|
| 1,052,778 |
|
|
| 157,154 |
|
|
| - |
|
|
| 1,209,932 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
|
| 921,993 |
|
|
| 1,016,284 |
|
|
| - |
|
|
| 1,938,277 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative |
|
| 837,015 |
|
|
| 857,502 |
|
|
| 372,279 |
|
|
| 2,066,796 |
|
| Professional fees |
|
| 14,805 |
|
|
| 8,521 |
|
|
| 322,415 |
|
|
| 345,741 |
|
| Acquisition costs |
|
| - |
|
|
| - |
|
|
| 32,263 |
|
|
| 32,263 |
|
| Total operating expenses |
|
| 851,820 |
|
|
| 866,023 |
|
|
| 726,957 |
|
|
| 2,444,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) from operations |
| $ | 70,173 |
|
| $ | 150,261 |
|
| $ | (726,957 | ) |
| $ | (506,523 | ) |
| F-45 |
| Table of Contents |
|
|
| For the Six Months Ended June 30, 2025 |
| |||||||||||||
|
|
| B2B |
|
| B2C |
|
| CORPORATE |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Revenue, services |
| $ | 3,668,685 |
|
| $ | 190,513 |
|
| $ | - |
|
| $ | 3,859,198 |
|
| Revenue, product sales |
|
| - |
|
|
| 2,100,954 |
|
|
| - |
|
|
| 2,100,954 |
|
| Total Revenue |
|
| 3,668,685 |
|
|
| 2,291,467 |
|
|
| - |
|
|
| 5,960,152 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenue, services |
|
| 2,035,130 |
|
|
| 51,219 |
|
|
| - |
|
|
| 2,086,349 |
|
| Cost of revenue, product sales |
|
| - |
|
|
| 228,406 |
|
|
| - |
|
|
| 228,406 |
|
| Total cost of revenue |
|
| 2,035,130 |
|
|
| 279,625 |
|
|
| - |
|
|
| 2,314,755 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
|
| 1,633,555 |
|
|
| 2,011,842 |
|
|
| - |
|
|
| 3,645,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative |
|
| 1,583,496 |
|
|
| 1,614,604 |
|
|
| 1,090,043 |
|
|
| 4,288,143 |
|
| Professional fees |
|
| 30,431 |
|
|
| 18,819 |
|
|
| 534,396 |
|
|
| 583,646 |
|
| Acquisition costs |
|
| - |
|
|
| - |
|
|
| 65,673 |
|
|
| 65,673 |
|
| Total operating expenses |
|
| 1,613,927 |
|
|
| 1,633,423 |
|
|
| 1,690,112 |
|
|
| 4,937,462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) from operations |
| $ | 19,628 |
|
| $ | 378,419 |
|
| $ | (1,690,112 | ) |
| $ | (1,292,065 | ) |
|
|
| For the Three Months Ended June 30, 2024 |
| |||||||||||||
|
|
| B2B |
|
| B2C |
|
| CORPORATE |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Revenue, services |
| $ | 915,475 |
|
| $ | 77,691 |
|
| $ | - |
|
| $ | 993,166 |
|
| Revenue, product sales |
|
| - |
|
|
| 733,433 |
|
|
| - |
|
|
| 733,433 |
|
| Total Revenue |
|
| 915,475 |
|
|
| 811,124 |
|
|
| - |
|
|
| 1,726,599 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenue, services |
|
| 550,269 |
|
|
| 7,249 |
|
|
| - |
|
|
| 557,518 |
|
| Cost of revenue, product sales |
|
| - |
|
|
| 193,650 |
|
|
| - |
|
|
| 193,650 |
|
| Total cost of revenue |
|
| 550,269 |
|
|
| 200,899 |
|
|
| - |
|
|
| 751,168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
|
| 365,206 |
|
|
| 610,225 |
|
|
| - |
|
|
| 975,431 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative |
|
| 277,825 |
|
|
| 538,158 |
|
|
| 535,672 |
|
|
| 1,351,655 |
|
| Professional fees |
|
| 12,918 |
|
|
| 9,961 |
|
|
| 198,376 |
|
|
| 221,255 |
|
| Acquisition costs |
|
| - |
|
|
| - |
|
|
| 8,946 |
|
|
| 8,946 |
|
| Total operating expenses |
|
| 290,743 |
|
|
| 548,119 |
|
|
| 742,994 |
|
|
| 1,581,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) from operations |
| $ | 74,463 |
|
| $ | 62,106 |
|
| $ | (742,994 | ) |
| $ | (606,425 | ) |
| F-46 |
| Table of Contents |
|
|
| For the Six Months Ended June 30, 2024 |
| |||||||||||||
|
|
| B2B |
|
| B2C |
|
| CORPORATE |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Revenue, services |
| $ | 1,593,597 |
|
| $ | 123,120 |
|
| $ | - |
|
| $ | 1,716,717 |
|
| Revenue, product sales |
|
| - |
|
|
| 1,596,784 |
|
|
| - |
|
|
| 1,596,784 |
|
| Total Revenue |
|
| 1,593,597 |
|
|
| 1,719,904 |
|
|
| - |
|
|
| 3,313,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenue, services |
|
| 911,199 |
|
|
| 13,025 |
|
|
| - |
|
|
| 924,224 |
|
| Cost of revenue, product sales |
|
| - |
|
|
| 409,510 |
|
|
| - |
|
|
| 409,510 |
|
| Total cost of revenue |
|
| 911,199 |
|
|
| 422,535 |
|
|
| - |
|
|
| 1,333,734 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
|
| 682,398 |
|
|
| 1,297,369 |
|
|
| - |
|
|
| 1,979,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative |
|
| 455,865 |
|
|
| 1,058,235 |
|
|
| 1,022,739 |
|
|
| 2,536,839 |
|
| Professional fees |
|
| 24,845 |
|
|
| 23,269 |
|
|
| 353,331 |
|
|
| 401,445 |
|
| Acquisition costs |
|
| - |
|
|
| - |
|
|
| 103,287 |
|
|
| 103,287 |
|
| Total operating expenses |
|
| 480,710 |
|
|
| 1,081,504 |
|
|
| 1,479,357 |
|
|
| 3,041,571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) from operations |
| $ | 201,688 |
|
| $ | 215,865 |
|
| $ | (1,479,357 | ) |
| $ | (1,061,804 | ) |
Included within selling, general and administrative is intangible asset amortization expense of $301,113 for the B2B segment and $0 for the B2C segment for the three months ended June 30, 2025 and $602,225 for the B2B segment and $0 for the B2C segment for the six months ended June 30, 2025. Intangible asset amortization expense of $70,882 for the B2B segment and $54,336 for the B2C segment was included for the three months ended June 30, 2024 and $141,740 for the B2B segment and $108,697 for the B2C segment was included for the six months ended June 30, 2024.
Unallocated Items
Business segment operating profit excludes the other items not considered part of management’s evaluation of segment operating performance such as a portion of management and administration costs, legal fees and settlements, stock-based compensation expense, significant asset impairments, gains or losses from divestitures, and other miscellaneous corporate activities. Excluded items are included in the reconciling item “Corporate” between operating profit from our business segments and our consolidated operating profit.
Assets
Total assets for each of our business segments were as follows:
|
|
| As of June 30, 2025 |
|
| As of December 31, 2024 |
| ||
| B2B |
| $ | 5,830,411 |
|
| $ | 6,495,983 |
|
| B2C |
|
| 2,127,401 |
|
|
| 2,097,863 |
|
| Total business segment assets |
|
| 7,957,812 |
|
|
| 8,593,846 |
|
| Corporate assets |
|
| 873,932 |
|
|
| 998,851 |
|
| Total Assets |
| $ | 8,831,744 |
|
| $ | 9,592,697 |
|
Corporate assets primarily include cash and cash equivalents, and investments in unconsolidated joint ventures. During the six months ended June 30, 2025, the Company incurred no reportable capital expenditures or additions to goodwill related to its segments.
| F-47 |
| Table of Contents |
NOTE 5 – BUSINESS ACQUISITIONS
DDS Rank
On June 6, 2024, SEO Marketing, Inc (dba DDS Rank) (“DDS Rank” or the “Acquired Business”) and DDS Rank LLC (“DDS Rank Delaware”), a subsidiary of the Company entered into and closed an asset purchase agreement (the "DDS Asset Purchase Agreement"), for the purchase by the Company of the Acquired Business.
Pursuant to the DDS Asset Purchase Agreement, and subject to the terms and conditions contained therein, at the closing, DDS Rank agreed to sell to the Company the Acquired Business, all as more fully described in the DDS Asset Purchase Agreement. The aggregate purchase price for the Acquired Business was $600,000, consisting of $200,000 in cash paid by OA SPV at closing, $200,000 in Company Series A preferred stock, and a $200,000 7% interest only secured promissory note made by DDS Rank Delaware due June 6, 2026 (the “DDS Promissory Note”).
The transaction closed on June 24, 2024, when consideration was transferred by the Company and control was obtained by the Company and was accounted for as a business combination under ASC 805.
The aggregate fair value of consideration for the DDS Rank acquisition was as follows:
| Purchase Price: |
|
|
| |
|
|
| Amount |
| |
| Cash paid to seller |
|
| 200,000 |
|
| Notes payable issued to seller |
|
| 200,000 |
|
| Series A preferred stock issued to seller |
|
| 200,000 |
|
| Total purchase consideration |
| $ | 600,000 |
|
The following information summarizes the allocation of the fair values assigned to the assets acquired at the acquisition date:
| Purchase Price Allocation |
|
|
| |
| Developed technology |
| $ | 90,000 |
|
| Customer relationships |
|
| 360,000 |
|
| Trademarks and Trade Names |
|
| 120,000 |
|
| Non-Compete agreement |
|
| 30,000 |
|
| Net assets acquired |
| $ | 600,000 |
|
Eastern Standard
On September 20, 2024, Eastern Standard LLC (“Eastern Standard Delaware”), a Delaware limited liability company and majority owned subsidiary, entered into an Asset Purchase Agreement (“Asset Purchase Agreement”) with Eastern Standard, LLC (“Eastern Standard Pennsylvania”), a Pennsylvania limited liability company, and its individual owners. Pursuant to the Asset Purchase Agreement, Eastern Standard Delaware will purchase from Eastern Standard Pennsylvania all of Eastern Standard Pennsylvania’s assets utilized in the operation of its business of providing digital marketing services, including integrated branding, and digital customer experiences (the “Acquired Business”).
Pursuant to the Asset Purchase Agreement, and subject to the terms and conditions contained therein, at the closing, Eastern Standard Pennsylvania agreed to sell to Eastern Standard Delaware the Acquired Business, all as more fully described in the Asset Purchase Agreement. The aggregate purchase price for the Acquired Business is $2,160,000. As of the closing, the Company owned 70% of Eastern Standard Delaware in exchange for $1,250,000 payable pursuant to two secured promissory notes which are guaranteed by the Company, and $410,000 of the Company’s Series A preferred stock. The entities comprising the Company’s special purpose vehicle funding program owns an aggregate of 20% of Eastern Standard Delaware in exchange for $500,000 payable in cash. Eastern Standard Pennsylvania owns a 10% roll-over equity interest in Eastern Standard Delaware.
| F-48 |
| Table of Contents |
The transaction closed on October 18, 2024, when consideration was transferred by Onfolio and control was obtained by Onfolio and will be accounted for as a business combination under ASC 805.
The aggregate fair value of consideration for the Eastern Standard acquisition was as follows:
| Purchase Price: |
|
|
| |
|
|
|
|
| |
| Cash |
| $ | 500,000 |
|
| Promissory Note, net of discount |
|
| 1,250,000 |
|
| Preferred Shares |
|
| 410,000 |
|
| Roll-over equity |
|
| 240,000 |
|
| Total purchase consideration |
|
| 2,400,000 |
|
The following information summarizes the allocation of the fair values assigned to the assets acquired at the acquisition date:
| Purchase Price Allocation |
|
|
| |
| Accounts receivable |
| $ | 217,878 |
|
| Unbilled receivables |
|
| 165,855 |
|
| Fixed assets |
|
| 5,135 |
|
| Website domains |
|
| 90,000 |
|
| Customer relationships |
|
| 490,000 |
|
| Trademarks and trade names |
|
| 530,000 |
|
| Non-compete agreement |
|
| 20,000 |
|
| Goodwill |
|
| 1,407,602 |
|
| Deferred revenues |
|
| (526,470 | ) |
|
|
|
|
|
|
| Net assets acquired |
| $ | 2,400,000 |
|
Unaudited Pro Forma Financial Information
The following table sets forth the pro-forma consolidated results of operations for the three and six months ended June 30, 2024 as if the Eastern Standard and DDS Rank acquisitions occurred on January 1, 2024. The pro forma results of operations are presented for informational purposes only and are not indicative of the results of operations that would have been achieved if the acquisitions had taken place on the dates noted above, or of results that may occur in the future.
|
|
| Three Months ended June 30, |
|
| Six Months Ended June 30 |
| ||
|
|
| 2024 |
|
| 2024 |
| ||
| Revenue |
| $ | 2,945,040 |
|
| $ | 5,756,983 |
|
| Operating income (loss) |
|
| 410,049 |
|
|
| (850,481 | ) |
| Net income (loss) |
|
| 292,044 |
|
|
| (921,308 | ) |
| Preferred dividends |
|
| (151,688 | ) |
|
| (202,713 | ) |
| Net income (loss) to common shareholders |
|
| 140,356 |
|
|
| (1,124,021 | ) |
| Net income (loss) per common share |
| $ | 0.03 |
|
|
| (0.22 | ) |
| Weighted Average common shares outstanding |
|
| 5,110,195 |
|
|
| 5,108,384 |
|
| F-49 |
| Table of Contents |
NOTE 6 – INVESTMENTS IN JOINT VENTURES
The Company holds various investments in certain joint ventures as described below.
Cost method investments
OnFolio JV I, LLC (“JV I”) was formed on October 11, 2019 under the laws of Delaware. OnFolio LLC is the managing member of JV I and has operational and financial decision-making authority. The manager of JV I can be removed by a majority vote of the equity holders of JV I. On August 1, 2020, the Company received an investment of 2.72% by assignment from Dominic Wells, the Company’s CEO, who invested $10,000 into JV I for the equity interest. As manager of JV I, the Company will receive a monthly management fee of $2,500, and 50% of net profits of JV I above the monthly minimum of $12,500. In the event of the sale of a website that JV I manages, the Company will receive 50% of the excess of the sales price above the price paid for the site. During the year ended December 31, 2022, the Company purchased an additional 10.91% interest from existing owners for $52,500 in cash, bringing its total equity interest to 13.65%. The management fee to the Company described above was waived for fiscal year ended December 31, 2024 and through the six months ended June 30, 2025, due to lower operating results of JV I.
OnFolio JV II, LLC (“JV II”) was formed on November 8, 2019 under the laws of Delaware. OnFolio LLC is the managing member of JV II and has operational and financial decision-making authority. The manager of JV II can be removed by a majority vote of the equity holders of JV II. On August 1, 2020, the Company received an investment of approximately 2.14% by assignment from Dominic Wells, the Company’s CEO, who invested $10,000 into JV II for the equity interest. Additionally, during the year ending December 31, 2020, the CEO acquired an additional interest from an existing JV II investor and transferred it to the Company, bringing its total equity interest in JV II to 4.28%. During the year ending December 31, 2021, the company acquired additional interest from an existing JV II investor by paying $9,400 for his 2.14%, bringing its total equity interest in JV II to 6.42%. As manager of JV II, the Company will receive a monthly management fee of $1,500, and 50% of net profits of JV II above the monthly minimum of $16,500. In the event of the sale of a website that JV II manages, the Company will receive 50% of the excess of the sales price above the price paid for the site. During the year ended December 31, 2022, the Company purchased an additional 4.28% interest from an existing owner for $10,000 in cash, bringing its total equity interest to 10.70%. Based on the cash purchase price of the additional interest, the Company determined there was an implied impairment in the amount of $14,401 related to the cost basis of JV II during the year ended December 31, 2022. The management fee to the Company described above was waived for fiscal year ended December 31, 2024 and through the six months ended June 30, 2025, due to lower operating results of JV II.
OnFolio JV III, LLC (“JV III”) was formed on January 3, 2020 under the laws of Delaware. OnFolio LLC is the managing member of JV III and has operational and financial decision-making authority. The manager of JV III can be removed by a majority vote of the equity holders of JV III. On August 1, 2020, the Company received an investment of approximately 1.94% by assignment from Dominic Wells, the Company’s CEO, who invested $10,000 into JV III for the equity interest. The $10,000 owed by the Company is included in Due to related parties on the consolidated balance sheet as of December 31, 2020. During the year ending December 31, 2021, the company acquired additional interests from existing JV III investors by paying $40,000 for 7.7652%, bringing its total equity interest in JV III to 9.7052%. As manager of JV III, the Company will receive a monthly management fee of $3,000, and 50% of net profits of JV III above the monthly minimum of $16,500. In the event of the sale of a website that JV III manages, the Company will receive 50% of the excess of the sales price above the price paid for the site. During the year ended December 31, 2022, the Company purchased an additional 3.88% interest from an existing owner for $5,000 in cash, bringing its total equity interest to 13.59%. Based on the cash purchase price of the additional interest, the Company determined there was an impairment in the amount of $37,493 recognized during the year ended December 31, 2022 related to the cost basis of JV III. The management fee to the Company described above was reduced to $500 for fiscal year ended December 31, 2022 due to lower operating results of JV III. The management fee to the Company described above was waived for fiscal year ended December 31, 2024 and through the six months ended June 30, 2025, due to lower operating results of JV III.
OnFolio Groupbuild 1 LLC (“Groupbuild”) was formed on April 22, 2020 under the laws of Delaware. The Company, as manager, is entitled to 20% of the profits of Groupbuild, and an annual management fee of $15,000. The Company was assigned a 20% interest, valued at $49,000 in Groupbuild by the Company’s CEO on August 1, 2020.
| F-50 |
| Table of Contents |
On March 4, 2024, the Company invested $10,000 into Coaching Plus Capital LLC for a 9.95% equity interest in the ownership.
On May 31, 2024, the Company, through its subsidiary Revenue Zen LLC, invested $24,000 into CliAcquire LLC for a 5% equity interest in the ownership.
On November 1, 2024, the Company, through its subsidiary Revenue Zen LLC, invested $25,000 into Grow Solo Media Ltd. for a 5% equity interest in the ownership.
Equity Method Investments
OnFolio JV IV, LLC (“JV IV”) was formed on January 3, 2020 under the laws of Delaware. The Company holds an equity interest of 35.8% in JV IV, and is the manager of JV IV. The Company acquired this interest on August 1, 2020 for $290,000 through issuance of a Note payable to the joint venture. The Company paid off the note payable during the year ended December 31, 2022. The manager of JV IV can be removed by a majority vote of the equity holders of JV IV.
The balance sheet of JV IV at June 30, 2025 included total assets of $826,490 and total liabilities of $8,906. The balance sheet of JV IV at December 31, 2024 included total assets of $842,594 and total liabilities of $27,153. Additionally, the income statement for JV IV for the three and six months ended June 30, 2025 and 2024 included the following:
|
|
| Three Months ended June 30, |
|
| Six Months ended June 30, |
| ||||||||||
|
|
| 2025 |
|
| 2024 |
|
| 2025 |
|
| 2024 |
| ||||
| Revenue |
| $ | 867 |
|
| $ | 9,194 |
|
| $ | 4,252 |
|
| $ | 13,723 |
|
| Net loss |
|
| (397 | ) |
|
| (2,968 | ) |
|
| 2,143 |
|
|
| (17,366 | ) |
The Company recognized equity method income (loss) of $767 and $(6,217) during the six months ended June 30, 2025 and 2024, respectively, and received dividends from JV IV of $2,250 and $0, respectively, which were accounted for as returns on investment.
NOTE 7 – INTANGIBLE ASSETS
The following table represents the balances of intangible assets as of June 30, 2025 and December 31, 2024:
|
|
| Estimated life |
| June 30, 2025 |
|
| December 31, 2024 |
| ||
| Website Domains |
| Indefinite |
| $ | 297,323 |
|
| $ | 297,323 |
|
| Website Domains |
| 4 years |
|
| 497,500 |
|
|
| 497,500 |
|
| Customer relationships |
| 4-6 years |
|
| 2,081,148 |
|
|
| 2,081,148 |
|
| Trademarks and Tradenames |
| 10 years |
|
| 1,120,000 |
|
|
| 1,120,000 |
|
| Non-compete agreements |
| 3 years |
|
| 252,500 |
|
|
| 252,500 |
|
|
|
|
|
|
| 4,248,471 |
|
|
| 4,248,471 |
|
| Accumulated Amortization - Website domains |
|
|
|
| (188,133 | ) |
|
| (125,946 | ) |
| Accumulated Amortization - Customer Relationships |
|
|
|
| (1,062,281 | ) |
|
| (626,994 | ) |
| Accumulated Amortization - Trademarks / Tradenames |
|
|
|
| (137,834 | ) |
|
| (81,834 | ) |
| Accumulated Amortization - Non-Compete |
|
|
|
| (139,237 | ) |
|
| (90,486 | ) |
| Net Intangible |
|
|
| $ | 2,720,986 |
|
| $ | 3,323,211 |
|
| F-51 |
| Table of Contents |
For the three months ended June 30, 2025 and 2024, the Company recognized $301,112 and $125,219, respectively, of amortization expense related to intangible assets. For the six months ended June 30, 2025 and 2024, the Company recognized $602,225 and $250,437, respectively, of amortization expense related to intangible assets.
The following is an amortization analysis of the annual amortization of intangible assets on a fiscal year basis as of June 30, 2025:
| For the year ended December 31, schedule of annual expected amortization expense |
| Amount |
| |
|
|
|
|
| |
| 2025 (6 months remaining) |
| $ | 597,225 |
|
| 2026 |
|
| 706,907 |
|
| 2027 |
|
| 297,156 |
|
| 2028 |
|
| 375,125 |
|
| Thereafter |
|
| 447,250 |
|
| Total remaining intangibles amortization |
| $ | 2,423,663 |
|
NOTE 8 – STOCKHOLDERS’ EQUITY
Preferred stock
The Company’s authorized preferred stock consists of 5,000,000 shares of preferred stock, with a par value of $0.001 per share. On November 20, 2020, the Company designated 1,000,000 shares of Series A preferred stock. The Series A preferred stock has a liquidation preference to all other securities, a liquidation value of $25 per share, receives cumulative dividends payable in cash of 12% per year, payable quarterly. The Series A preferred stock does not have voting rights, except that the Company may not: 1) create any additional class or series of stock, nor any security convertible into stock of the Company; 2) modify the Series A preferred stock designation; 3) initiate and dividend outside of without approval of at least two-thirds of the holders of the Series A preferred stock. The Company has the right, but not obligation to redeem the Series A preferred stock beginning January 1, 2026, at the liquidation value per share plus any unpaid dividends.
On February 28, 2025, the Company issued $70,000 in Series A preferred stock to the sellers of RevenueZen as further discussed in Note 13.
During the six months ended June 30, 2025, the Company sold 33,200 shares of Series A preferred stock for $830,000 in cash proceeds.
During the six months ended June 30, 2025 and 2024, the Company recognized $199,851 and $166,113 in dividends to the Series A preferred stockholders, respectively, and made cash dividend payments of $201,848 and $151,035, respectively. As of June 30, 2025 and December 31, 2024, the Company has remaining unpaid dividends of $98,800 and $100,797, respectively.
As of June 30, 2025 and December 31, 2024, there were 171,900 and 134,460 Series A preferred stock outstanding, respectively.
Common stock
The Company’s authorized common stock consists of 50,000,000 shares of common stock, with a par value of $0.001 per share. All shares of common stock have equal voting rights and, when validly issued and outstanding, are entitled to one non-cumulative vote per share in all matters to be voted upon by shareholders. The shares of common stock have no pre-emptive, subscription, conversion or redemption rights and may be issued only as fully paid and non-assessable shares. Holders of the common stock are entitled to equal ratable rights to dividends and distributions with respect to the common stock, as may be declared by the Board of Directors out of funds legally available. The Company has not declared any dividends on common stock to date.
| F-52 |
| Table of Contents |
Stock Options
On February 28, 2025, the Company issued 79,240 stock options to purchase shares of common stock to the sellers of RevenueZen as further discussed in Note 13. The stock options have an exercise price of $1.34, have a term of 10 years, and are vested immediately.
During the six months ended June 30, 2025, the Company awarded an aggregate of 120,000 common stock options to the non-employee directors of the Company, of which 60,000 vested immediately, and the remaining 60,000 vest on December 31, 2025. In addition, the Company awarded 200,000 options to our CFO that vested immediately. The fair value of the stock options was estimated using a Black-Scholes option pricing model and the following assumptions: 1) dividend yield of 0%; 2) risk-free rate of 3.97%; 3) volatility between 139.19% and 141.49% based on a group of peer group companies; and an expected term of five to ten years.
During the six months ended June 30, 2025, the Company awarded 5,500 options to an outside consultant that vested immediately. The fair value of the stock options was estimated using a Black-Scholes option pricing model and the following assumptions: 1) dividend yield of 0%; 2) risk-free rate of 3.87%; 3) volatility of 148.62% based on a group of peer group companies; and an expected term of three years.
A summary of stock option information is as follows:
|
|
| Outstanding Awards |
|
| Weighted Average Grant Date Fair Value |
|
| Weighted Average Exercise price |
| |||
| Outstanding at December 31, 2024 |
|
| 412,250 |
|
| $ | 0.65 |
|
| $ | 1.02 |
|
| Granted |
|
| 404,740 |
|
|
| 1.09 |
|
|
| 1.22 |
|
| Exercised |
|
| - |
|
|
| - |
|
|
| - |
|
| Expired |
|
| (26,250 | ) |
|
| (4.40 | ) |
|
| (5.95 | ) |
| Forfeited and cancelled |
|
| (8,880 | ) |
|
| (0.26 | ) |
|
| (1.38 | ) |
| Outstanding at June 30, 2025 |
|
| 781,860 |
|
| $ | 1.09 |
|
| $ | 0.95 |
|
| Exercisable at June 30, 2025 |
|
| 511,860 |
|
| $ | 1.03 |
|
| $ | 1.19 |
|
The weighted average remaining contractual life is approximately 8.91 years for stock options outstanding with $150,300 of intrinsic value of as of June 30, 2025. The Company recognized stock-based compensation of $26,013 and $34,655 during the three months ended June 30, 2025 and 2024, respectively. The Company recognized stock-based compensation of $298,948 and $45,397 during the six months ended June 30, 2025 and 2024, respectively. The Company has $42,009 additional compensation cost related to options that are expected to vest.
Common Stock Warrants
A summary of stock warrant information is as follows:
|
|
| Outstanding Awards |
|
| Weighted Average Grant Date Fair Value |
|
| Weighted Average Exercise price |
| |||
| Outstanding at December 31, 2024 |
|
| 6,199,863 |
|
| $ | 4.21 |
|
| $ | 5.01 |
|
| Granted |
|
| - |
|
|
| - |
|
|
| - |
|
| Exercised |
|
| - |
|
|
| - |
|
|
| - |
|
| Forfeited and cancelled |
|
| - |
|
|
| - |
|
|
| - |
|
| Outstanding at June 30, 2025 |
|
| 6,199,863 |
|
| $ | 4.21 |
|
| $ | 5.01 |
|
| Exercisable at June 30, 2025 |
|
| 6,199,863 |
|
| $ | 4.21 |
|
| $ | 5.01 |
|
The weighted average remaining contractual life is approximately 2.15 years for stock warrants outstanding with no intrinsic value of as of June 30, 2025.
| F-53 |
| Table of Contents |
NOTE 9 – RELATED PARTY TRANSACTIONS
From time to time, the Company pays expenses directly on behalf of the joint ventures that it manages and receives funds on behalf of the joint ventures. As of June 30, 2025 and December 31, 2024, the balances due from the joint ventures were $93,811 and $89,536 included in non-current assets.
From time to time, the Company’s CEO paid expenses on behalf of the Company, and the Company funded certain expenses to the CEO. Additionally, the Company received its investments in JV I, JV II and JV III from the CEO. As of June 30, 2025 and December 31, 2024, the Company was owed $36,994 by the entities controlled by the Company’s CEO.
No member of management has benefited from the transactions with related parties. The above transactions were not arms-length transactions.
NOTE 10 – NOTES PAYABLE
On January 4, 2024, the Company entered into a promissory note as part of the acquisition of RevenueZen (the “RevenueZen Note”). The RevenueZen Note has the principal sum of $440,000, matures on December 31, 2025, and interest on the outstanding principal balance of, and all other sums owing under the loan amount, is 11%. Upon the occurrence of an Event of Default (as defined in the RevenueZen Note), the interest rate automatically increases to the rate of 16% per annum. The loan amount is payable as follows: (i) commencing on the date that was thirty (30) days from the date of the RevenueZenNote and continuing monthly on such same day thereafter, the Company shall make an interest only payment equal to $4,033 per month and commencing on July 31, 2024 the Company shall make an interest only payment of $3,575 per month (ii) no later than June 30, 2024, the Company must make a payment of $50,000; and (iii) the entire loan amount, together with all accrued but unpaid interest thereon, shall be due and payable on December 31, 2025. The required $50,000 payment was made on July 2, 2024. As of June 30, 2025 the balance due on the RevenueZen Note was $390,000.
In January 2024, the Company entered into three separate promissory notes for aggregate principal of $250,000 and received cash proceeds of $250,000. The notes mature on the two-year anniversary of the Company using the funds received for the acquisition of a business, which occurred in January 2024, and carry a 15% interest rate on the outstanding principal balance of, and all other sums owing under, the loan amounts of the notes. As of June 30, 2025 the balance due on the notes was $250,000.
On April 1, 2024 the Company received proceeds of $200,000 under note payable agreements from OA SPV, under note payable agreements from OA SPV, a related party as described under Note 2. The notes are unsecured and mature three years from the date of the advances, which is April 1, 2027. On February 26, 2025 the notes payable was modified to bear a 15% interest rate, calculated on the outstanding principal amount. Interest shall accrue annually and be payable at the end of each fiscal quarter in accordance with the profitability and cash flow of the Company’s wholly-owned subsidiaries, as agreed upon by both parties. The Company repaid $1,000 of the funds advanced. As of June 30, 2025 the balance due on the advance was $199,000 and is classified under Notes payable – related parties, on the balance sheet.
On June 6, 2024, the Company entered into a promissory note as part of the acquisition of DDS Rank (the “DDS Rank Note”). The DDS Rank Note has the principal sum of $200,000, matures on June 6, 2026, and interest on the outstanding principal balance of, and all other sums owing under the loan amount, is 7%. The loan amount is payable as follows: (i) commencing on the date that was thirty (30) days from the date of the DDS Rank Note and continuing monthly on such same day thereafter, the Company shall make an interest only payment equal to $1,167 per month (ii) the entire loan amount, together with all accrued but unpaid interest thereon, shall be due and payable on June 6, 2026. As of June 30, 2025 the balance due on the DDS Rank Note was $200,000.
| F-54 |
| Table of Contents |
On October 1, 2024, the Company entered into a promissory Note as part of the acquisition of Eastern Standard (the “Eastern Standard Short-Term Note”). The Eastern Standard Short-Term Note has the principal sum of $400,000, matures on February 1, 2025, and interest on the outstanding principal balance of, and all other sums owing under the loan amount, is 8%. The loan amount is payable as follows: (i) commencing on the date that was thirty (30) days from the date of the Eastern Standard Short Term Note and continuing monthly on such same day thereafter, the Company shall make an interest only payment equal to $2,667 per month (ii) the entire loan amount, together with all accrued but unpaid interest thereon, shall be due and payable on February 1, 2025. On February 1 2025, OA SPV repaid the balance owed on the Eastern Standard Short-Term Note in exchange for an additional equity interest of 16% in Eastern Standard.
In addition, on October 1, 2024, the Company entered into a promissory note as part of the acquisition of Eastern Standard (the “Eastern Standard Note”). The Eastern Standard Note has the principal sum of $850,000, matures on October 1, 2026, and interest on the outstanding principal balance of, and all other sums owing under the loan amount, is 8%. The loan amount is payable as follows: (i) commencing on the date that was thirty (30) days from the date of the Eastern Standard Note and continuing monthly on such same day thereafter, the Company shall make an interest only payment equal to $5,667 per month (ii) the entire loan amount, together with all accrued but unpaid interest thereon, shall be due and payable on October 1, 2026. As of June 30, 2025, the balance due on the Eastern Standard Note was $850,000, which is classified under Notes payable – related parties, on the balance sheet.
On February 28, 2025, the Company issued a promissory note for $340,000 to the RevenueZen Sellers in connection with the earn-out payment as discussed in Note 13. The promissory note has a term of 60 months and accrues interest at 19%. As of June 30, 2025, the balance due on the Eastern Standard Note was $329,527, which is classified under Notes payable – related parties, on the balance sheet.
On June 2, 2025, the Company received proceeds of $35,965 under a note payable agreement from OA SPV, a related party as described under Note 2. The notes are unsecured and mature three years from the date of the advances, which is June 2, 2028 and bear a 15% interest rate, calculated on the outstanding principal amount. Interest shall accrue annually and be payable at the end of each fiscal quarter in accordance with the profitability and cash flow of the Company’s wholly-owned subsidiaries, as agreed upon by both parties. As of June 30, 2025 the balance due on the advance was $35,965 and is classified under Notes payable – related parties, on the balance sheet.
At various times the Company enters into short-term financing agreements with payment service providers who provide cash proceeds. The Company will repay the principal balance based on a percentage of its daily sales processed through the service provider until the total principal is repaid, based on the repayment terms in the agreement which is generally less than one year. The following table shows the outstanding balances of these lenders as of June 30, 2025:
| Borrowing Entity |
| Origination Date |
| Interest rate |
|
| Original cash advanced |
|
| Balance as of June 30, 2025 |
| |||
| Proofread Anywhere |
| May 25, 2025 |
|
| 13.2 | % |
| $ | 200,000 |
|
| $ | 199,638 |
|
| Proofread Anywhere |
| May 25, 2025 |
|
| 13.2 | % |
| $ | 50,000 |
|
| $ | 49,909 |
|
| Vital Reaction |
| October 31, 2024 |
|
| 13 | % |
| $ | 83,000 |
|
| $ | 40,341 |
|
| Contentellect |
| June 30, 2025 |
|
| 10.80 | % |
| $ | 74,780 |
|
| $ | 74,780 |
|
| DDS Rank |
| June 28, 2025 |
|
| 12 | % |
| $ | 15,100 |
|
| $ | 15,100 |
|
| Onfolio Assets |
| June 28, 2025 |
|
| 12.2 | % |
|
| 16,600 |
|
| $ | 16,600 |
|
| SEO Butler |
| November 18, 2024 |
|
| 9.91 | % |
| $ | 21,650 |
|
| $ | 1,922 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total balance as of June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
| $ | 398,290 |
|
| F-55 |
| Table of Contents |
The following summarizes the Company’s maturities of debt instruments:
|
|
| Principal |
| |
| Fiscal year ended: |
|
|
| |
| December 31, 2025 |
| $ | 828,100 |
|
| December 31, 2026 |
|
| 1,351,863 |
|
| December 31, 2027 |
|
| 261,622 |
|
| December 31, 2028 |
|
| 111,578 |
|
| December 31, 2029 and thereafter |
|
| 116,941 |
|
| Total |
| $ | 2,670,104 |
|
NOTE 11 – DEFERRED REVENUE
Deferred revenue as of June 30, 2025 and December 31, 2024 consisted of the following:
|
|
| June 30, 2025 |
|
| December 31, 2024 |
| ||
| Website design and implementation |
| $ | 243,475 |
|
| $ | 451,683 |
|
| Website management |
|
| 62,725 |
|
|
| 72,237 |
|
| Advertising and content services |
|
| 33,530 |
|
|
| 65,993 |
|
| Total deferred revenue |
| $ | 339,730 |
|
| $ | 589,913 |
|
Changes in the balance of deferred revenue for the periods presented are as follows:
|
|
| Deferred Revenue |
| |
| Balance as of December 31, 2024 |
| $ | 589,913 |
|
| Billings for the period |
|
| 3,609,015 |
|
| Revenue recognized |
|
| (3,859,198 | ) |
| Balance as of June 30, 2025 |
| $ | 339,730 |
|
The transaction price from revenue transactions allocated to unsatisfied performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancelable contracts that will be invoiced and recognized as revenue in future periods ("backlog"). While deferred revenue is recorded on our balance sheet as a liability, backlog is not recorded in revenue, deferred revenue or elsewhere in our consolidated financial statements until we establish a contractual right to invoice, at which point it is recorded as revenue or deferred revenue as appropriate. As of June 30, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was $339,730 in deferred revenue and $849,432 in backlog. As of December 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $589,913 in deferred revenue and $1,071,098 in backlog.
We expect that the amount of backlog relative to the total value of our contracts will change from year to year due to several factors, including the amount invoiced early in the contract term, the timing and duration of customer agreements, varying invoicing cycles of agreements and changes in customer financial circumstances. Accordingly, we believe that fluctuations in backlog are not always a reliable indicator of future revenues, and we do not utilize backlog internally as a key management metric.
| F-56 |
| Table of Contents |
NOTE 12 – CONTRACTS IN PROCESS
The net unbilled accounts receivables (deferred revenues) position for contracts in process, related to the website design and implementation services, consisted of the following:
|
|
| June 30, |
|
| December 31, |
| ||
|
|
| 2025 |
|
| 2024 |
| ||
| Costs on uncompleted contracts |
| $ | 673,861 |
|
| $ | 624,865 |
|
| Estimated earnings |
|
| 732,106 |
|
|
| 712,658 |
|
| Total costs and estimated profits on uncompleted contracts |
|
| 1,405,967 |
|
|
| 1,337,523 |
|
| Add: unbilled amounts on completed contracts |
|
| 14,215 |
|
|
| 7,000 |
|
| Less: Progress billings |
|
| (1,598,104 | ) |
|
| (1,703,630 | ) |
| Unbilled accounts receivables (deferred revenues), net |
| $ | (177,922 | ) |
| $ | (359,107 | ) |
The net asset (liability) position for contracts in process is included in the accompanying consolidated balance sheets as follows:
|
|
| June 30, 2025 |
|
| December 31, 2024 |
| ||
| Unbilled accounts receivable costs and estimated earnings in excess of billings on uncompleted contracts |
| $ | 65,553 |
|
| $ | 92,576 |
|
| Deferred revenues - Billings in excess of costs and estimated earnings on uncompleted contracts |
|
| (243,475 | ) |
|
| (451,683 | ) |
| Unbilled accounts receivables (deferred revenues), net |
| $ | (177,922 | ) |
| $ | (359,107 | ) |
NOTE 13 – COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Company may become a party to lawsuits involving various matters. The impact and outcome of litigation, if any, is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. The Company believes the ultimate resolution of any such current proceeding will not have a material adverse effect on our continued financial position, results of operations or cash flows.
On October 3, 2022, the Company entered into an Asset Purchase Agreement (“Hoang Asset Purchase Agreement”) with Hoang Huu Thinh, an individual (“Hoang”) for the purchase of the BWPS business. Pursuant to the Hoang Asset Purchase Agreement, the Company is to pay Hoang up to $60,000 in cash pursuant to the earn-out provisions of the Hoang Asset Purchase Agreement. The earn-out provisions were defined as follows, upon completion of the Closing and within three (3) years thereafter ("Earn-out Period" ends 10/3/2025), Hoang shall be eligible for two additional cash payments (i) if in any calendar month, the monthly gross revenue generated by the BWPS business is US$47,500 or more, then the buyer shall pay Hoang a one-time payment of US$30,000 (“Earn-out Payment 1”), payable within thirty days of the Earn-out Payment 1 being earned and (ii) if in any calendar month, the monthly gross revenue generated by the BWPS Business is US$52,000 or more, then the buyer shall pay Hoang a one-time payment of US$30,000 (“Earn-out Payment 2”), payable within thirty days of the Earn-out Payment 2 being earned. As of June 30, 2025, no payments have been made pursuant to the earn-out provision.
On January 1, 2024, the Company entered into the RevenueZen Asset Purchase Agreement, and subject to the terms and conditions contained therein, at the closing, the Company agreed to pay additional earn-out payments that could be paid to RevenueZen pursuant to the earn-out formula described in the RevenueZen Asset Purchase Agreement.
| F-57 |
| Table of Contents |
The earn-out formula specifies for a period of one year, if the SDE of the RevenueZen business exceeds $227,000, the sellers of RevenueZen Delaware would be entitled to receive an amount equal to three times the amount above $227,000 of SDE. Generally, SDE in this case is defined as gross revenue, less returns, discounts, and refunds and reduced by the cost of contractor payments, freelance copywriters, and payroll and benefits, consistent with the pre-acquisition business operation practices of the RevenueZen business, and for the sake of clarity exclude any payments, reimbursements, administrative charges, overhead charges, or other payments of any kind to the Company. The earn-out amount will include 20% of any revenues of the Company that are from any customers of RevenueZen Delaware. The Company has the option to pay any earn-out amount in cash or in shares of preferred stock of the Company. At the time of the closing of the acquisition, the Company had estimated the fair value of the earn-out to be $986,000. As of December 31, 2024, pursuant to the terms and calculations of the earn-out provision, management determined the final earn-out owed pursuant to the agreement is $680,662 resulting in a change in the fair value of the contingent consideration of $305,338.
On February 28, 2025, the Company and the RevenueZen sellers agreed to the final earn-out amount to be $682,000 and modified the payment terms to be paid with a cash payment of $72,000, $100,000 to be paid through profit sharing by using 30% of net operating income of RevenueZen, $100,000 in value for 79,240 stock options to purchase shares of common stock, $70,000 in Series A preferred stock, and $340,000 in a promissory note. The promissory note has a term of 60 months and accrues interest at 19%. The stock options have an exercise price of $1.34, have a term of 10 years, and vested immediately. During the six months ended June 30, 2025, the Company has repaid $14,025 pursuant to the profit share agreement. As of June 30, 2025 the Company estimated the remaining obligations owed under the revenue share obligation to be $85,975.
On April 1, 2024, the Company closed on its acquisition of certain customers from First Page, and subject to the terms and conditions contained in the acquisition agreement, at the closing, the Company agreed to pay additional revenue share amount equal to 18% of gross revenues for the acquired customers for 3 years following the acquisition date. On the date of acquisition, the Company estimated the fair value of the revenue share to be $343,148. During the six months ended June 30, 2025, the Company paid $47,824 to the seller of First Page pursuant to the revenue share provisions. As of June 30, 2025, the Company estimated the remaining obligations owed under the revenue share provisions to be $121,056 resulting in a change in the fair value of the continent consideration of $72,050.
NOTE 14 – SUBSEQUENT EVENTS
Management has evaluated events through August 13, 2025, the date these financial statements were available for issuance, and noted no events requiring disclosures
| F-58 |
| Table of Contents |
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with this registration statement. All of such expenses are estimates, other than the filing fees payable to the Securities and Exchange Commission (“SEC”). We will pay all these expenses.
|
|
| Amount to be paid |
| |
| SEC registration fee |
| $ | 4,752.32 |
|
| Accounting fees and expenses |
| $ | 10,000.00 |
|
| Legal fees and expenses |
| $ | 15,000.00 |
|
| Transfer Agent fees and expenses |
| $ | 5,000.00 |
|
| Miscellaneous fees and expenses |
| $ | 5,000.00 |
|
| Total |
| $ | 39,752.32 |
|
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the DGCL, or Section 145, provides that a Delaware corporation may indemnify any person who was, is or is threatened to be made, party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was illegal. A Delaware corporation may indemnify any persons who are, were or are a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person is or was a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests, provided that no indemnification is permitted without judicial approval if the officer, director, employee or agent is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses which such officer or director has actually and reasonably incurred.
| II-1 |
| Table of Contents |
Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his or her status as such, whether or not the corporation would otherwise have the power to indemnify him under Section 145.
Our certificate of incorporation and bylaws provide that we must indemnify our directors and officers to the fullest extent permitted by the DGCL and must indemnify against all expenses, liability, and loss incurred in investigating, defending or participating in such proceedings.
We have also entered into separate indemnification agreements with our directors and officers. Each indemnification agreement provides, among other things, for indemnification to the fullest extent permitted by law and our bylaws against any and all expenses, judgments, fines, penalties and amounts paid in settlement of any claim. The indemnification agreements provide for the advancement or payment of all expenses to the indemnitee.
The indemnification rights set forth above shall not be exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, provision of our certificate of incorporation, our bylaws, agreement, vote of stockholders or disinterested directors or otherwise; provided, however, in the case of any such amendment or interpretation, only to the extent that such amendment or interpretation permits us to provide broader indemnification rights than we were permitted prior thereto.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, our Company has sold the following securities without registering the securities under the under the Securities Act of 1933, as amended (the “Securities Act”):
| Date |
| Security |
| Oct. 2022 |
| Warrant – Warrant to purchase 20,000 shares of Common Stock at $4.75 per share issued in connection with a business acquisition. |
| Dec. 2023 |
| Preferred Shares — 22,600 shares with a purchase price of $25 per share issued for cash. |
| Jan. 2024 |
| Preferred Shares —17,000 shares with a purchase price of $25 per share issued in connection with a business acquisition. |
| Jan. – Mar. 2024 |
| Preferred Shares — 400 shares with a purchase price of $25 per share issued for cash. |
| June 2024 |
| Preferred Shares — 800 shares with a purchase price of $25 per share issued for cash. |
| Oct. 2024 |
| Preferred Shares —16,400 shares with a purchase price of $25 per share issued in connection with a business acquisition. |
| Feb. 2025 |
| Preferred Shares —2,800 shares with a purchase price of $25 per share issued in connection with a business acquisition earnout payment. |
| Jan. – Mar. 2025 |
| Preferred Shares — 28,000 shares with a purchase price of $25 per share issued for cash. |
All of the securities were offered and sold in reliance upon exemptions from registration under Section 4(a)(2) of the Securities Act and/or (i) Rule 506 of Regulation D promulgated thereunder; or (ii) Regulation S promulgated thereunder. No underwriters were utilized, and no commissions or fees were paid with respect to any of the above transactions.
| II-2 |
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT INDEX
| Exhibit No. |
| Description of Exhibit |
| Location |
|
|
| Incorporated by reference to Company’s Form 8-K filed on 01/04/24 | ||
|
| Incorporated by reference to Company’s Form 8-K filed on 09/24/24 | |||
|
|
| Incorporated by reference to Company’s Form 8-K filed on 10/22/2024 | ||
|
|
| Incorporated by reference to Company’s Form 8-K filed on 01/17/2023 | ||
|
|
| Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 | ||
|
|
| Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 08/16/22 | ||
|
|
| Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/26/22 | ||
|
| Warrant Agency Agreement, dated August 30, 2022, between the Company and VStock Transfer LLC |
| Incorporated by reference to Company’s Form 8-K filed with the SEC on 8/30/22 | |
|
|
| Incorporated by reference to Company’s Form 8-K filed with the SEC on 8/30/2022 | ||
|
|
| Incorporated by reference to Company’s Form 8-K filed with the SEC on 7/25/22 | ||
|
|
| Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 5/13/22 | ||
|
|
| Filed Herewith | ||
|
|
| Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 9/20/22 | ||
|
|
| Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 8/1622 | ||
|
|
| Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 | ||
|
|
| Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 | ||
|
| Form of Non-Qualified Stock Option Award Agreement - Consultants |
| Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 | |
|
|
| Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 | ||
|
| Form of Non-Qualified Stock Option Award Agreement - Non Employee Directors |
| Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 | |
|
| Form of Stock Option Exercise Agreement - Non Employee Directors |
| Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 | |
|
|
| Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 | ||
|
|
| Incorporated by reference to Company’s Form 10-K filed with the SEC on 4/16/25 | ||
|
| Employment Agreement dated as of January 1, 2022, by the Company and Dominic Wells |
| Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 | |
|
| Employee Agreement Amendment dated as of March 25, 2025 by the Company and Dominic Wells |
| Incorporated by reference to Company’s Form 10-Q filed with the SEC on 08/14/25 | |
|
| Employee Agreement dated as of December 19, 2024, by the Company and Adam Trainor |
| Incorporated by reference to Company’s Form 8-K filed with the SEC on 12/20/2024 |
| II-3 |
| Table of Contents |
|
|
| Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 | ||
|
|
| Incorporated by reference to Company’s Form 8-K filed on 01/04/24 | ||
|
|
| Incorporated by reference to Company’s Form 8-K filed on 10/22/2024 | ||
|
|
| Incorporated by reference to Company’s Form 8-K filed on 10/22/2024 | ||
|
|
| Incorporated by reference to Company’s Form 8-K filed on 10/22/2024 | ||
|
|
| Incorporated by reference to Company’s Form 8-K filed on 10/22/2024 | ||
|
|
| Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 05/13/22 | ||
|
|
| Incorporated by reference to Company’s Form 10-K filed with the SEC on 4/16/25 | ||
|
|
| Filed herewith | ||
|
|
| Incorporated by reference to Company’s Form 10-K filed with the SEC on 4/16/25 | ||
|
| Consent of Independent Registered Public Accounting Firm – Astra Audit & Advisory, LLC |
| Filed herewith | |
|
|
| Filed herewith | ||
|
|
| Incorporated by reference to Company’s Form 10-K filed on 04/01/24 | ||
| 101.INS |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
|
|
| 101.SCH |
| Inline XBRL Taxonomy Extension Schema Document |
|
|
| 101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
| 101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
| 101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
| 101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
| 104 |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
|
|
|
|
| Filed Herewith |
| + | Indicates a management contract or any compensatory plan, contract or arrangement. |
| II-4 |
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
|
| (1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
|
| (i) | To include any prospectus required by section 10(a)(3) of the Securities Act; |
|
|
|
|
|
| (ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement. |
|
|
|
|
|
| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
provided, however, that paragraphs (i), (ii) and (iii) do not apply if the registration statement is on Form S-1 and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement;
|
| (2) | That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
|
|
|
|
|
| (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
|
|
|
|
|
| (4) | That, for the purpose of determining liability under the Securities Act to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
|
|
|
|
|
| (5) | That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
|
| (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
|
|
|
|
|
| (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
|
|
|
|
|
| (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
|
|
|
|
|
| (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
|
| (6) | That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
| II-5 |
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Wilmington, State of Delaware, on August 22, 2025.
|
| ONFOLIO HOLDINGS INC. | ||
|
|
|
|
|
| By: | /s/ Dominic Wells | ||
|
|
| Name: Dominic Wells |
|
|
|
| Title: Chief Executive Officer |
|
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
| Signature |
| Title |
| Date |
|
|
|
|
|
|
| /s/ Dominic Wells |
| Chief Executive Officer, and Chair of the Board, Principal Executive Officer |
| August 22, 2025 |
| Dominic Wells |
|
| ||
|
|
|
|
|
|
| /s/ Adam Trainor |
| Chief Financial Officer, Chief Operations Officer, Principal Financial and Accounting Officer |
| August 22, 2025 |
| Adam Trainor |
|
| ||
|
|
|
|
|
|
| /s/ Andrew Lawrence |
|
|
| August 22, 2025 |
| Andrew Lawrence |
| Director |
| |
|
|
|
|
|
|
| /s/ David McKeegan |
|
|
| August 22, 2025 |
| David McKeegan |
| Director |
| |
|
|
|
|
|
|
| /s/ Robert J. Lipstein |
|
|
| August 22, 2025 |
| Robert J. Lipstein |
| Director |
| |
|
|
|
|
|
|
| /s/ Mark N. Schwartz |
|
|
| August 22, 2025 |
| Mark N. Schwartz |
| Director |
|
|
| II-6 |
EXHIBIT 5.1
[David M. Bovi, P.A. Letterhead]
August 22, 2025
Onfolio Holdings Inc.
1007 North Orange Street, 4th Floor
Wilmington, Delaware 19801
Via E-Mail Only
| Re: | Registration Statement on Form S-1 |
Gentlemen:
We have acted as counsel to Onfolio Holdings Inc., a Delaware corporation (the “Company”), in connection with the Registration Statement on Form S-1 filed by the Company (the “Registration Statement”) with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”). The Registration Statement relates to 6,199,863 shares of common stock issuable upon the exercise of warrants including 6,117,250 shares of common stock issuable upon exercise of warrants issued to investors in the Company’s initial public offering (the “publicly-traded warrants”) and 82,613 of common stock issuable upon the exercise of warrants issued to the representative of the underwriters in the Company’s initial public offering (the “representative’s warrants”). The shares of common stock issuable upon exercise of the publicly-traded warrants and the shares of common stock issuable upon exercise of the representative’s warrants are collectively referred to herein as the “Warrant Shares.”
The opinions expressed herein are limited exclusively to the Delaware General Corporation Law, and we have not considered, and express no opinion on, any other laws or the laws of any other jurisdiction.
In rendering the opinions expressed herein, we have examined and relied upon the originals, or copies certified to our satisfaction, of:
|
| (i) | the Registration Statement; |
|
| (ii) | the Company’s amended and restated certificate of incorporation, as currently in effect; |
|
| (iii) | the Company’s amended and restated bylaws, as currently in effect; |
|
| (iv) | certain resolutions of the Board of Directors of the Company; |
|
| (v) | the warrant agency agreement (including the form of warrant agreement contained therein); |
|
| (vi) | the form of representative’s warrant; and |
|
| (vii) | such other records, documents and instruments as we have deemed necessary for the expression of the opinions stated herein. |
In making the foregoing examinations, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies thereof and the authenticity of the originals of such latter documents. As to all questions of fact material to this opinion, where such facts have not been independently established, we have relied, to the extent we have deemed reasonably appropriate, upon representations or certificates of officers of the Company or governmental officials and representations of the Company. Further, with your permission, we have made and relied upon the following assumption, without any investigation or inquiry by us, and our opinions expressed below are subject to, and limited and qualified by the effect of, such assumption that a sufficient number of shares of the Company’s common stock will be available and reserved for issuance of the Warrant Shares.
Based upon and subject to the foregoing, we are of the opinion that the Warrant Shares, upon payment to the Company of the required consideration, and when issued and sold by the Company and paid for in accordance with the terms of the publicly traded warrants and representative’s warrants, as applicable, will be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion with the Commission as Exhibit 5.1 to the Registration Statement, and to the reference to our firm under the caption “Legal Matters” in the Registration Statement. In giving such consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act. This opinion is rendered to you as of the date hereof and we assume no obligation to advise you or any other person hereafter with regard to any change after the date hereof in the circumstances or the law that may bear on the matters set forth herein even though the change may affect the legal analysis or legal conclusion or other matters in this opinion.
Very truly yours,
| /s/ DAVID M. BOVI, P.A. |
|
| DAVID M. BOVI, P.A. |
|
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
| Parent Company | Onfolio Holdings Inc | Delaware |
| Subsidiaries | Onfolio LLC | Delaware |
| Mighty Deals LLC | Delaware | |
|
| Vital Reaction LLC | Delaware |
|
| Onfolio Assets, LLC | Delaware |
| SEO Butler Limited | England/Whales | |
|
| Proofreadanywhere LLC | Delaware |
|
| Contentellect LLC | Delaware |
|
| WP Folio LLC | Delaware |
|
| RevenueZen, LLC | Delaware |
| DDS Rank, LLC | Delaware | |
|
| Eastern Standard, LLC | Delaware |
|
| Onfolio Management, LLC | Delaware |
|
| DealPipe, LLC | Delaware |
|
| Pace Generative LLC | Delaware |
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors of
Onfolio Holdings Inc.
We hereby consent to the incorporation by reference in the registration statement of Onfolio Holdings Inc. on Form S-1 of our report dated April 15, 2025 (such report including an explanatory paragraph regarding Onfolio Holdings Inc.’s ability to continue as a going concern) with respect to the audited financial statements of Onfolio Holdings Inc. for the years ended December 31, 2024 and 2023.
We also consent to the references to us under the heading “Experts” in such Registration Statement.
/s/ Astra Audit & Advisory, LLC
Astra Audit & Advisory, LLC
Tampa, FL
August 22, 2025