Onfolio Holdings, Inc 10-Q for FY2025 Q1
Onfolio Holdings, Inc (ONFO)
About this 10-Q
Onfolio Holdings, Inc filed this 10-Q on May 15, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.81M
- up 77.2% from $1.59M a year earlier
- Net loss
- $806.43K
- compared with a net loss of $477.83K a year earlier
- Diluted EPS
- -$0.18
- compared with -$0.11 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________to ___________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter) |
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(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
| (Zip Code) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
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Warrants To Purchase Common Stock |
| ONFOW |
| Nasdaq Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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 | ☐ |
☒ | 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 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Number of common stock outstanding as of May 15, 2025 was
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PART I. FINANCIAL INFORMATION |
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| Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024 |
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| Consolidated Statements of Stockholders’ Equity for the Three Months ended March 31, 2025 and 2024 |
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| Consolidated Statements of Cash Flows for the Three Months ended March 31, 2025 and 2024 |
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| Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Table of Contents |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report on Form 10-Q 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.
Examples of forward-looking statements include, but are not limited to:
| ● | the anticipated timing of the development of future products or services; |
| ● | 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; |
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| our ability to raise additional capital or additional funding to further develop and expand our business to meet our long-term business objectives. We have limited revenues and we cannot predict when or if 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 websites 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 websites 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; |
| ● | our market position and market conditions, including the effects of government policies, tariffs and trade barriers; |
| ● | the occurrence of hostilities, political instability or catastrophic events and wars; |
| ● | our ability to maintain the listing or trading of our common stock and warrants on the NASDAQ Capital Market and the potential impact on our business if we fail to do so; |
| ● | 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; |
| ● | other risks to which our Company is subject; and |
| ● | other factors beyond the Company’s control. |
The ultimate correctness of these forward-looking statements depends upon a number of known and unknown risks and events. We discuss our known material risks under Part I Item 1.A “Risk Factors” contained in our Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and Part II, Item 1.A “Risk Factors” in this report on Form 10-Q. Many factors could cause our actual results to differ materially from the forward-looking statements. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
The forward-looking statements speak only as of the date on which they are made, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
| 3 |
| Table of Contents |
ITEM 1. FINANCIAL STATEMENTS.
Onfolio Holdings Inc. | ||||||||
Consolidated Balance Sheets | ||||||||
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Assets |
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Current Assets: |
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Cash |
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Accounts receivable, net |
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Inventory |
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Prepaids and other current assets |
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Total Current Assets |
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Intangible assets, net |
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Goodwill |
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Fixed Assets , net |
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Due from related party |
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Investment in unconsolidated joint ventures, cost method |
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Investment in unconsolidated joint ventures, equity method |
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Other assets |
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Total Assets |
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Liabilities and Stockholders’ Equity |
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Current Liabilities: |
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Accounts payable and other current liabilities |
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Dividends payable |
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Notes payable, current |
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Notes payable – related parties, current |
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Contingent consideration |
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Deferred revenue |
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Total Current Liabilities |
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Notes payable |
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Notes payable - related parties |
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Total Liabilities |
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Commitments and Contingencies (Note13) |
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Stockholders' Equity: |
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Preferred stock, $ |
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Series A Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
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Total Onfolio Inc. stockholders’ equity |
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Non-Controlling Interests |
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Total Stockholders' Equity |
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Total Liabilities and Stockholders' Equity |
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The accompanying notes are an integral part of these unaudited consolidated financial statements
| 4 |
| Table of Contents |
Onfolio Holdings Inc. | ||||||||
Consolidated Statements of Operations | ||||||||
(Unaudited) | ||||||||
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| For the Three Months Ended March 31, |
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| 2025 |
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| 2024 |
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Revenue, services |
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Revenue, product sales |
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Total Revenue |
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Cost of revenue, services |
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Cost of revenue, product sales |
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Total cost of revenue |
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Gross profit |
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Operating expenses |
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Selling, general and administrative |
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Professional fees |
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Acquisition costs |
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Total operating expenses |
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Loss from operations |
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Other income (expense) |
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Equity method income (loss) |
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Dividend income |
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Interest income (expense), net |
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Other income |
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Change in fair value of contingent consideration |
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Total other income (expense) |
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Loss before income taxes |
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Income tax (provision) benefit |
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Net loss |
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Net loss attributable to noncontrolling interest |
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Net loss attributable to Onfolio Holdings Inc. |
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Preferred Dividends |
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Net loss to common shareholders |
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Net loss per common shareholder |
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Basic and diluted |
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Weighted average shares outstanding |
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Basic and diluted |
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The accompanying notes are an integral part of these unaudited consolidated financial statements
| 5 |
| Table of Contents |
Onfolio Holdings Inc. | ||||||||||||||||||||||||||||||||||||
Consolidated Statements of Stockholders' Equity | ||||||||||||||||||||||||||||||||||||
For the Three Months Ended March 31, 2025 and 2024 | ||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||
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| Accumulated |
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| Preferred Stock, $0.001 Par value |
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| Common Stock, $0.001 Par Value |
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| Additional Paid-In |
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| Accumulated |
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| Other Comprehensive |
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| Non Controlling |
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| Deficit |
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Balance, December 31, 2024 |
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Sale of preferred stock for cash |
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Preferred stock and common stock options issued for payment of contingent consideration |
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Stock-based compensation |
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Non-controlling interest investment for payment of note payable |
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Preferred dividends |
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Foreign currency translation |
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Distributions to non-controlling interest |
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Net loss |
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Balance, March 31, 2025 |
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Balance, December 31, 2023 |
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Acquisition of Business |
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Sale of preferred stock for cash |
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Stock-based compensation |
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Preferred dividends |
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Foreign currency translation |
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Net loss |
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Balance, March 31, 2024 |
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The accompanying notes are an integral part of these unaudited consolidated financial statements | ||||||||||||||||||||||||||||||||||||
| 6 |
| Table of Contents |
Onfolio Holdings Inc. | ||||||||
Consolidated Statements of Cash Flows | ||||||||
For the Three Months Ended March 31, 2025 and 2024 | ||||||||
(Unaudited) | ||||||||
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| 2024 |
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Cash Flows from Operating Activities |
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Net loss |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock-based compensation expense |
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Equity method (income)/loss |
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Amortization of intangible assets |
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Depreciation expense |
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Change in fair value of contingent consideration |
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Net change in: |
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Accounts receivable |
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Inventory |
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Prepaids and other current assets |
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| ( | ) |
Accounts payable and other current liabilities |
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Due to joint ventures |
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Deferred revenue |
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Due to related parties |
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Net cash used in operating activities |
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Cash Flows from Investing Activities |
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Cash paid for cost method investments |
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Cash paid to acquire businesses |
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Net cash used in investing activities |
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Cash Flows from Financing Activities |
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Proceeds from sale of Series A preferred stock |
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Payments of preferred dividends |
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Distributions to non-controlling interest holders |
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Proceeds from notes payable |
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Payments on note payables |
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Payments on contingent consideration |
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Net cash provided by financing activities |
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Effect of foreign currency translation |
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Net Change in Cash |
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Cash, Beginning of Period |
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Cash, End of Period |
| $ |
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Cash Paid For: |
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Income Taxes |
| $ |
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| $ |
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Interest |
| $ |
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Supplemental Non-cash Disclosures |
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Preferred dividends accrued |
| $ |
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| $ |
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Promissory notes issued for acquisitions |
| $ |
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| $ |
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Preferred stock issued for acquisitions |
| $ |
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| $ |
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Settlement of contingent consideration for note payable, preferred stock and stock options |
| $ |
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| $ |
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Non-controlling interest issued for settlement of note payable |
| $ |
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| $ |
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The accompanying notes are an integral part of these unaudited consolidated financial statements | ||||||||
| 7 |
| Table of Contents |
ONFOLIO HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 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 months ended March 31, 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 months ended March 31, 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, and DealPipe, LLC. The Company also maintains majority ownership in DDS Rank, LLC, RevenueZen, LLC, and Eastern Standard, LLC which are owned
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.
| 8 |
| 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
The current investment in unconsolidated affiliates accounted for under the equity method consists of a
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
The Company, through its subsidiary RevenueZen, LLC, is the manager of CliAcquire, LLC (“CliAcquire”). The Company holds a
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.
| 9 |
| Table of Contents |
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.
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.
| 10 |
| Table of Contents |
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.
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.
| 11 |
| Table of Contents |
The following table presented disaggregated revenue information for the three months ended March 31, 2025 and 2024:
|
| For the Three Months ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
Website management |
| $ |
|
| $ |
| ||
Advertising and content revenue |
|
|
|
|
|
| ||
Product sales |
|
|
|
|
|
| ||
Digital Product Sales |
|
|
|
|
|
| ||
Total revenue |
| $ |
|
| $ |
| ||
The Company does not have any single customer that accounted for greater than 10% of revenue during the three months ended March 31, 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
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.
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:
| 12 |
| Table of Contents |
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.
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 $
| 13 |
| Table of Contents |
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 is currently evaluating the effect of this pronouncement on its disclosures.
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 March 31, 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.
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 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.
| 14 |
| 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. 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 (in millions):
|
| For the Three Months Ended March 31, 2025 |
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| B2B |
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| B2C |
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| CORPORATE |
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| Total |
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Revenue, services |
| $ |
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Revenue, product sales |
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Total Revenue |
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Cost of revenue, services |
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Cost of revenue, product sales |
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Total cost of revenue |
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Gross profit |
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Operating expenses |
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Selling, general and administrative |
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Professional fees |
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Acquisition costs |
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| ||||
Total operating expenses |
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| ||||
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Income (loss) from operations |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |
|
| For the Three Months Ended March 31, 2024 |
| |||||||||||||
|
| B2B |
|
| B2C |
|
| CORPORATE |
|
| Total |
| ||||
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| ||||
Revenue, services |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Revenue, product sales |
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| ||||
Total Revenue |
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| ||||
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Cost of revenue, services |
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| ||||
Cost of revenue, product sales |
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| ||||
Total cost of revenue |
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| ||||
|
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Gross profit |
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| ||||
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Operating expenses |
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Selling, general and administrative |
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| ||||
Professional fees |
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| ||||
Acquisition costs |
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| ||||
Total operating expenses |
|
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| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
| $ |
| $ |
| $ | ( | ) |
| $ | ( | ) | ||||
| 15 |
| Table of Contents |
Included within Selling, general and administrative is intangible asset amortization expense of $
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.
Assets
Total assets for each of our business segments were as follows:
|
| As of March 31, 2025 |
|
| As of December 31, 2024 |
| ||
B2B |
| $ |
|
| $ |
| ||
B2C |
|
|
|
|
|
| ||
Total business segment assets |
|
|
|
|
|
| ||
Corporate assets |
|
|
|
|
|
| ||
Total Assets |
| $ |
|
| $ |
| ||
Corporate assets primarily include cash and cash equivalents, and investments in unconsolidated joint ventures. During the three months ended March 31, 2025, the Company incurred no reportable capital expenditures or additions to goodwill related to its segments.
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 $
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:
| 16 |
| Table of Contents |
Purchase Price: |
|
|
| |
|
| Amount |
| |
Cash paid to seller |
|
|
| |
Notes payable issued to seller |
|
|
| |
Series A preferred stock issued to seller |
|
|
| |
Total purchase consideration |
| $ |
| |
The following information summarizes the allocation of the fair values assigned to the assets acquired at the acquisition date:
Purchase Price Allocation |
|
|
| |
Developed technology |
| $ |
| |
Customer relationships |
|
|
| |
Trademarks and Trade Names |
|
|
| |
Non-Compete agreement |
|
|
| |
Net assets acquired |
| $ |
| |
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 $
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 |
| $ |
| |
Promissory Note, net of discount |
|
|
| |
Preferred Shares |
|
|
| |
Roll-over equity |
|
|
| |
Total purchase consideration |
|
|
| |
| 17 |
| Table of Contents |
The following information summarizes the allocation of the fair values assigned to the assets acquired at the acquisition date:
Purchase Price Allocation |
|
|
| |
Accounts receivable |
| $ |
| |
Unbilled receivables |
|
|
| |
Fixed assets |
|
|
| |
Website domains |
|
|
| |
Customer relationships |
|
|
| |
Trademarks and trade names |
|
|
| |
Non-compete agreement |
|
|
| |
Goodwill |
|
|
| |
Deferred revenues |
|
| ( | ) |
|
|
|
|
|
Net assets acquired |
| $ |
| |
Unaudited Pro Forma Financial Information
The following table sets forth the pro-forma consolidated results of operations for the three months ended March 31, 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 March 31, |
| |
|
| 2024 |
| |
Revenue |
| $ |
| |
Operating loss |
|
| ( | ) |
Net loss |
|
| ( | ) |
Net loss per common share |
| $ | ( | ) |
Weighted Average common shares outstanding |
|
|
| |
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
| 18 |
| Table of Contents |
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
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
OnFolio Groupbuild 1 LLC (“Groupbuild”) was formed on April 22, 2020 under the laws of Delaware.
On March 4, 2024, the Company invested $
On May 31, 2024, the Company, through its subsidiary Revenue Zen LLC, invested $
On November 1, 2024, the Company, through its subsidiary Revenue Zen LLC, invested $
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
| 19 |
| Table of Contents |
The balance sheet of JV IV at March 31, 2025 included total assets of $
|
| Three Months ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
Revenue |
| $ |
|
| $ |
| ||
Net income (loss) |
|
|
|
|
| ( |
| |
The Company recognized equity method income (loss) of $
NOTE 7 – INTANGIBLE ASSETS
The following table represents the balances of intangible assets as of March 31, 2025 and December 31, 2024:
|
| Estimated life |
| March 31, 2025 |
|
| December 31, 2024 |
| ||
Website Domains |
| Indefinite |
| $ |
|
| $ |
| ||
Website Domains |
|
|
|
|
|
|
| |||
Customer relationships |
|
|
|
|
|
|
| |||
Trademarks and Tradenames |
|
|
|
|
|
|
| |||
Non-compete agreements |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
| ||
Accumulated Amortization - Website domains |
|
|
|
| ( | ) |
|
| ( | ) |
Accumulated Amortization - Customer Relationships |
|
|
|
| ( | ) |
|
| ( | ) |
Accumulated Amortization - Trademarks / Tradenames |
|
|
|
| ( | ) |
|
| ( | ) |
Accumulated Amortization - Non-Compete |
|
|
|
| ( | ) |
|
| ( | ) |
Net Intangible |
|
|
| $ |
|
| $ |
| ||
For the three months ended March 31, 2025 and 2024, the Company recognized $
The following is an amortization analysis of the annual amortization of intangible assets on a fiscal year basis as of March 31, 2025:
For the year ended December 31, schedule of annual expected amortization expense |
| Amount |
| |
|
|
|
| |
2025 (9 months remaining) |
| $ |
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
Thereafter |
|
|
| |
Total remaining intangibles amortization |
| $ |
| |
| 20 |
| Table of Contents |
NOTE 8 – STOCKHOLDERS’ EQUITY
Preferred stock
The Company’s authorized preferred stock consists of
On February 28, 2025, the Company issued $
During the three months ended March 31, 2025, the Company sold
During the three months ended March 31, 2025 and 2024, the Company recognized $
As of March 31, 2025 and December 31, 2024, there were
Common stock
The Company’s authorized common stock consists of
Stock Options
On February 28, 2025, the Company issued
During the three months ended March 31, 2025, the Company awarded an aggregate of
| 21 |
| Table of Contents |
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 |
|
|
|
| $ |
|
| $ |
| |||
Granted |
|
|
|
|
|
|
|
|
| |||
Exercised |
|
| - |
|
|
|
|
|
|
| ||
Expired |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Forfeited and cancelled |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Outstanding at March 31, 2025 |
|
|
|
| $ |
|
| $ |
| |||
Exercisable at March 31, 2025 |
|
|
|
| $ |
|
| $ |
| |||
The weighted average remaining contractual life is approximately
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 |
|
|
|
| $ |
|
| $ |
| |||
Granted |
|
| - |
|
|
|
|
|
|
| ||
Exercised |
|
| - |
|
|
|
|
|
|
| ||
Forfeited and cancelled |
|
| - |
|
|
|
|
|
|
| ||
Outstanding at March 31, 2025 |
|
|
|
| $ |
|
| $ |
| |||
Exercisable at March 31, 2025 |
|
|
|
| $ |
|
| $ |
| |||
The weighted average remaining contractual life is approximately
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 March 31, 2025 and December 31, 2024, the balances due from the joint ventures were $
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 March 31, 2025 and December 31, 2024, the Company was owed $
No member of management has benefited from the transactions with related parties . The above transactions were not arms-length transactions.
| 22 |
| Table of Contents |
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
In January 2024, the Company entered into three separate promissory notes for aggregate principal of $
On April 1, 2024 the Company received proceeds of $
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 $
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 $
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 $
On February 28, 2025, the Company issued a promissory note for $
| 23 |
| Table of Contents |
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 March 31, 2025:
Borrowing Entity |
| Origination Date |
| Interest rate |
|
| Original cash advanced |
|
| Balance as of March 31, 2025 |
| |||
Proofread Anywhere |
|
|
| % |
| $ |
|
| $ |
| ||||
Vital Reaction |
|
|
| % |
| $ |
|
| $ |
| ||||
Contentellect |
|
|
| % |
| $ |
|
| $ |
| ||||
SEO Butler |
|
|
| % |
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total balance as of March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
| $ |
| |
The following summarizes the Company’s maturities of debt instruments:
|
| Principal |
| |
Fiscal year ended: |
|
|
| |
December 31, 2025 |
| $ |
| |
December 31, 2026 |
|
|
| |
December 31, 2027 |
|
|
| |
December 31, 2028 |
|
|
| |
December 31, 2029 and thereafter |
|
|
| |
Total |
| $ |
| |
NOTE 11 – DEFERRED REVENUE
Deferred revenue as of March 31, 2025 and December 31, 2024 consisted of the following:
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
Website design and implementation |
| $ |
|
| $ |
| ||
Website management |
|
|
|
|
|
| ||
Advertising and content services |
|
|
|
|
|
| ||
Total deferred revenue |
| $ |
|
| $ |
| ||
Changes in the balance of deferred revenue for the periods presented are as follows:
|
| Deferred Revenue |
| |
Balance as of December 31, 2024 |
| $ |
| |
Billings for the period |
|
|
| |
Revenue recognized |
|
| ( | ) |
Balance as of March 31, 2025 |
| $ |
| |
| 24 |
| Table of Contents |
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 March 31, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was $
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.
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:
|
| March 31, |
|
| December 31, |
| ||
|
| 2025 |
|
| 2024 |
| ||
Costs on uncompleted contracts |
| $ |
|
| $ |
| ||
Estimated earnings |
|
|
|
|
|
| ||
Total costs and estimated profits on uncompleted contracts |
|
|
|
|
|
| ||
Add: unbilled amounts on completed contracts |
|
|
|
|
|
| ||
Less: Progress billings |
|
| ( | ) |
|
| ( | ) |
Unbilled accounts receivables (deferred revenues), net |
| $ | ( | ) |
| $ | ( | ) |
The net asset (liability) position for contracts in process is included in the accompanying consolidated balance sheets as follows:
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
Unbilled accounts receivable costs and estimated earnings in excess of billings on uncompleted contracts |
| $ |
|
| $ |
| ||
Deferred revenues - Billings in excess of costs and estimated earnings on uncompleted contracts |
|
| ( | ) |
|
| ( | ) |
Unbilled accounts receivables (deferred revenues), net |
| $ | ( | ) |
| $ | ( | ) |
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,
| 25 |
| Table of Contents |
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 of the RevenueZen business exceeds $
On February 28, 2025, the Company and the RevenueZen sellers agreed to the final earn-out amount to be $
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,
NOTE 14 – SUBSEQUENT EVENTS
Management has evaluated events through May 15, 2025, the date these financial statements were available for issuance, and noted no events requiring disclosures.
| 26 |
| Table of Contents |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis should be read in conjunction with our consolidated financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management. This information should also be read in conjunction with our audited historical consolidated financial statements which are included 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.
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.
The first quarter of 2025 continued the positive trajectory we’ve been building over the past year, with strong performance across revenue, gross profit, operational efficiency and organic growth. Revenue for the quarter reached $2.8M, up from $1.5M in the same period last year, signifying an 87% increase. Notably, February marked the first time we crossed $1M in monthly revenue.
Cash used in operations decreased to $145k, compared to $431k in Q1 2024, reflecting improvements in both operational discipline and revenue contribution. Our cash balance also increased approximately 40% year-over-year, supported by a successful preferred share raise during Q1, which further strengthened our financial position.
While our net loss increased from $477k in Q1 2024, to $806k in Q1 2025, $272k of this was stock-based-compensation, most of which was a one-time expense, as well as $175k in higher amortization expense compared to the prior year. Taking these non-cash increases into account, our net loss improved year-on-year.
Further, in Q1 we continued our work on reducing costs across both the portfolio and the parent company. In addition to further operational streamlining, we identified several opportunities to merge functions, and facilitate cross-selling across the portfolio.
We are also seeing organic revenue growth at several of our key properties, and we believe this momentum moves us further towards monthly profitability as we move deeper into 2025.
On the acquisition front, we continue to maintain a strong acquisition pipeline, and are actively working towards completing new transactions.
Management remains committed to continuous improvement and achieving profitability by focusing on executing our strategy with discipline, improving our financial performance and completing accretive acquisitions.
| 27 |
| Table of Contents |
Emerging Growth Company
We qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:
| · | have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; |
| · | comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); |
| · | submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay” and “say-on-frequency;” |
| · | disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation. |
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, 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. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of our initial public offering, (ii) the last day of the first fiscal year in which our total annual gross revenues are $1.07 billion or more, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iv) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
Principal Factors Affecting Our Financial Performance
Our operating results are primarily affected by the following factors at a portfolio company level:
| · | our ability to acquire new customers or retain existing customers and grow revenue; |
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| · | our ability to offer competitive product pricing and control expenses; |
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| · | our ability to broaden product offerings; |
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| · | industry demand and competition; |
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| · | our ability to leverage technology and use and develop efficient processes; |
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| · | our ability to attract and retain talented employees; |
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| · | our ability to identify and acquire companies at reasonable prices and terms; |
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| · | our ability to reduce and control corporate overhead; and |
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| · | Our market position and market conditions, including the effects of government policies, tariffs and trade barriers. |
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Results of Operations
Three Months Ended March 31, 2025 compared to the Three Months Ended March 31, 2024
The Company reported a net loss of $806,428 for the three months ended March 31, 2025 compared to a net loss of $477,826 for the three months ended March 31, 2024. The components of the increase in net loss for the current period are as follows:
Revenues
|
| For the Quarter Ended March 31, |
|
| $ Change from prior |
|
| % Change from prior |
| |||||||
|
| 2025 |
|
| 2024 |
|
| Year |
|
| year |
| ||||
Revenue, services |
| $ | 1,796,595 |
|
| $ | 723,551 |
|
| $ | 1,073,044 |
|
|
| 148 | % |
Revenue, product sales |
|
| 1,015,348 |
|
|
| 863,351 |
|
|
| 151,997 |
|
|
| 18 | % |
Total Revenue |
| $ | 2,811,943 |
|
| $ | 1,586,902 |
|
|
| 1,225,041 |
|
|
| 77 | % |
Revenue increased by $1,225,041, or 77% for the three months ended March 31, 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 $917,500 and our DDS Rank acquisition completed at the end of the second quarter of fiscal 2024, which increased revenue by approximately $52,500. In addition, our digital product sales increased by approximately $230,000 under our Proofread anywhere subsidiary as a result of a change in business marketing strategy.
Cost of Revenue
|
| For the Quarter Ended March 31, |
|
| $ Change from |
|
| % Change from |
| |||||||
|
| 2025 |
|
| 2024 |
|
| prior year |
|
| prior year |
| ||||
Cost of revenue, services |
| $ | 1,016,860 |
|
| $ | 366,706 |
|
| $ | 650,154 |
|
|
| 177 | % |
Cost of revenue, product sales |
|
| 87,963 |
|
|
| 215,860 |
|
|
| (127,897 | ) |
|
| (59 | )% |
Total Cost of Revenue |
|
| 1,104,823 |
|
|
| 582,566 |
|
|
| 522,257 |
|
|
| 90 | % |
Cost of revenue increased by $522,257, or 90% 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 $1,036,163, or 87% during the three months ended March 31, 2025 compared to 2024. The increase was primarily due to an increase in advertising and marketing costs of $328,000, an increase in stock-based compensation expense of $255,000, increase in contractor and compensation costs of $142,000, increase in other general and administrative costs of $135,000, including travel and merchant fees, and an increase in amortization expenses of $176,000 associated with the acquired intangible assets not present in the comparable period.
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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 $57,715, or 32% during the three months ended March 31, 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 $33,410 in acquisition costs during the three months ended March 31, 2025 compared to $94,341 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 $38,405 during the three months ended March 31, 2025, compared to other expense of $22,447 during 2024. The increase in other income 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:
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| For the Three Months ended March 31, |
| |||||
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| 2025 |
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| 2024 |
| ||
Revenue |
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| ||
B2B |
| $ | 1,693,914 |
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| $ | 678,122 |
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B2C |
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| 1,118,029 |
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| 908,780 |
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Total revenue |
| $ | 2,811,943 |
|
| $ | 1,586,902 |
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Cost of Sales |
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B2B |
| $ | 1,016,860 |
|
| $ | 360,930 |
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B2C |
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| 87,963 |
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| 221,636 |
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Total Cost of Sales |
| $ | 1,104,823 |
|
| $ | 582,566 |
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Operating income (loss) |
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B2B |
| $ | (50,545 | ) |
| $ | 127,225 |
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B2C |
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| 228,158 |
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| 153,759 |
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Total business segment operating income (loss) |
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| 177,613 |
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| 280,984 |
|
Unallocated items |
|
| (985,553 | ) |
|
| (736,363 | ) |
Total consolidated operating income (loss) |
| $ | (807,940 | ) |
| $ | (455,379 | ) |
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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 $1,015,792 or 150% during the three months ended March 31, 2025 compared to the three months ended March 31, 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 $52,500, and our Eastern Standard acquisition completed during the fourth quarter of fiscal 2024, which increased revenue by approximately $917,500.
B2B total operating income decreased by $177,770 or 140% during the three months ended March 31, 2025 compared to the three months ended March 31, 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.
B2C revenue increased by $209,249 or 23% during the three months ended March 31, 2025 compared to the three months ended March 31, 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 $228,158 during the three months ended March 31, 2025 compared to an operating income of $153,759 during the three months ended March 31, 2024, primarily due to the increase in sales from the Proofread Anywhere subsidiary.
Liquidity and Capital Resources
Our primary source of operating cash inflows are payments from portfolio companies. In addition, the Company has raised $1,300,000 pursuant to a private offerings of Series A preferred stock through March 31, 2025, $618,000 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 March 31, 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 $145,049 and $431,007 for the three months ended March 31, 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.
Cash used in investing activities
Net cash used in investing activities was $0 and $250,000 for the three months ended March 31, 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.
Cash provided by financing activities
Cash flows provided by financing activities was $297,831 for the three months ended March 31, 2025 compared to cash provided by financing activities of $264,135 during the three months ended March 31, 2024. During the 2025 period, we received $700,000 in proceeds from sales of Series A preferred stock and we paid $99,250 in dividends to preferred stockholders, made payments totaling $176,624 on notes payable, made payments totaling $108,475 related to contingent consideration and made distributions totaling $17,820 to our non-controlling interest holders. During the 2024 period, we received $350,000 in proceeds from notes payable and we paid $70,122 in dividends to preferred stockholders and made payments totaling $25,743 on notes payable
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.
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.
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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.
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 March 31, 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 March 31, 2025, the Company estimated the remaining obligations owed under the revenue share obligation to be $100,000,
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 March 31, 2025, the Company estimated the remaining obligations owed under the revenue share provisions to be $148,943 resulting in a change in the fair value of the continent consideration of $55,511.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2025, the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is accumulated and communicated to a company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Based on the evaluation of our disclosure controls and procedures as of March 31, 2025, our management, with the participation of our principal executive officer and principal financial officer has concluded that, based on such evaluation, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were not effective due to the material weakness described below. However, our management, including our principal executive officer and principal financial officer, has concluded that, notwithstanding the identified material weakness in our internal control over financial reporting, the financial statements in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.
Material Weakness in Internal Controls Over Financial Reporting
We identified a material weakness in our internal control over financial reporting that exists as of March 31, 2025. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We determined that we had a material weakness because:
| · | Due to our small size, and our limited number of personnel, the design and maintenance of controls over the review and documentation of manual journal entries and review was ineffective. These control deficiencies did not result in adjustment to the consolidated financial statements. |
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| · | The design and maintenance of controls over the accounting for website design and implementation and website management revenues was ineffective. These control deficiencies resulted in immaterial adjustments to the consolidated financial statements. |
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| · | The design and maintenance of effective internal controls over the accounting for impairment of goodwill and intangible assets and purchase accounting was ineffective. Specifically, certain control activities to ensure the impairment testing was performed in the appropriate order and that the assumptions used in developing the estimated fair value of the assets subject to impairment testing were not performed on a timely basis or at the appropriate level of precision. These control deficiencies resulted in the revision of the Company's consolidated financial statements for the year ended December 31, 2023 and the quarterly periods in 2024. |
Notwithstanding the material weaknesses in our internal control over financial reporting, we have concluded that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.
Management’s Plan to Remediate the Material Weakness
With the oversight of senior management, management is working towards remediation of these weaknesses in 2025 including addition of accounting personnel and to evaluate and implement procedures that will strengthen our internal controls. While we believe these measures will remediate the material weakness identified and strengthen our internal control over financial reporting, there is no assurance that we will demonstrate sufficient improvement that the material weakness will be remediated. We are committed to continuing to improve our internal control processes and will continue to diligently review our financial reporting controls and procedures.
Changes in Internal Control
There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.
ITEM 1A. RISK FACTORS.
In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A. Risk Factors in our 2024 Form 10-K, as filed with the SEC on April 16, 2025, which could materially affect our business, financial condition or future results. The risks described in this Form 10-Q and in our 2024 Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition or future results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
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 757,342 for the three months ended March 31, 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.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
The following is a summary of all securities that we have sold during the period covered by this report without registration under the Securities Act of 1933, as amended (the “Securities Act”):
During the three months ended March 31, 2025, our Company sold 28,000 shares of Series A preferred stock at $25 per share for total consideration of $700,000.
On February 28, 2025, in connection with an earnout payment related to our RevenueZen acquisition as discussed in Note 13, our Company issued 2,800 shares of Series A preferred stock valued at $70,000 ($25 per share).
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.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
Trading Arrangements
During the three months ended March 31, 2025, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5- 1(c) under the Exchange Act or any “non-Rule 10b5-1 arrangement” as defined in Item 408(c) of Regulation S-K.
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ITEM 6. EXHIBITS.
The following exhibits are included herein:
Exhibit No. |
| Description of Exhibit |
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101.INS* |
| Inline XBRL Instance 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.
**Furnished herewith.
| 37 |
| Table of Contents |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ONFOLIO HOLDINGS INC. |
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Date: May 15, 2025 | By: | /s/ Dominic Wells |
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| Dominic Wells Chief Executive Officer (Principal Executive Officer) |
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Date: May 15, 2025 | By: | /s/ Adam Trainor |
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| Adam Trainor Chief Financial Officer (Principal Financial and Accounting Officer) |
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| 38 |
EXHIBIT 31.1
| Certification of Chief Executive Officer of Onfolio Holdings Inc. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
I, Dominic Wells, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Onfolio Holdings Inc.; |
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| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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| 4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 15, 2025 | /s/ Dominic Wells |
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| Dominic Wells |
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| Chief Executive Officer (Principal Executive Officer) |
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EXHIBIT 31.2
Certification of Chief Financial Officer of Onfolio Holdings Inc.
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Adam Trainor, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Onfolio Holdings Inc.; |
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| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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| 4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 15, 2025 | /s/ Adam Trainor |
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| Adam Trainor |
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| Chief Financial Officer (Principal Financial and Accounting Officer) |
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EXHIBIT 32.1
Certification of Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Dominic Wells, Chief Executive Officer of Onfolio Holdings Inc. (the “Company”), hereby certifies that based on the undersigned’s knowledge:
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| 1. | The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: May 15, 2025 | /s/ Dominic Wells |
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| Dominic Wells |
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| Chief Executive Officer (Principal Executive Officer) |
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EXHIBIT 32.2
Certification of Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Adam Trainor, Chief Financial Officer of Onfolio Holdings Inc. (the “Company”), hereby certifies that based on the undersigned’s knowledge:
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| 1. | The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: May 15, 2025 | /s/ Adam Trainor |
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| Adam Trainor Chief Financial Officer |
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| (Principal Financial and Accounting Officer) |
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