ONFO 8-K/A
Onfolio Holdings, Inc (ONFO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Warrants To Purchase Common Stock | ONFOW | Nasdaq Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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.
Explanatory Note
On January 4, 2024, Onfolio Holdings, Inc. (the "Company'') filed with the Securities and Exchange Commission a Current Report on Form 8-K (the "Original Form 8-K") disclosing, among other things, that on December 31, 2023 it had completed the purchase of substantially all of the assets utilized in the operation of the business of RevenueZen LLC, an Oregon limited liability company ("RevenueZen").
This Current Report on Form 8-K/A amends and supplements the Original Form 8-K to provide the disclosures required by Item 9.01 of Form 8-K, which were not previously filed with the Original Form 8-K, including the required financial statements of ReveunueZen and the required pro forma financial statements. Except as otherwise provided herein, the other disclosures made in the Original Form 8-K remain unchanged.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
The Audited Financial Statements of ReveunueZen for the years ended December 31, 2023 and 2022 are attached hereto as Exhibit 99.1 and incorporated herein by reference.
(b) Pro forma financial information.
The unaudited pro forma financial statements and explanatory notes relating to the Company's acquisitions of ReveunueZen are attached hereto as Exhibit 99.2 and incorporated herein by reference.
(d) Exhibits.
Exhibit No. |
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104 |
| Cover Page Interactive Data File (formatted as Inline XBRL) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ONFOLIO HOLDINGS INC. |
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Date: March 15, 2023 | By: | /s/ Dominic Wells |
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| Dominic Wells, |
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| Chief Executive Officer |
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EXHIBIT 99.1
RevenueZen, eLLC
FINANCIAL STATEMENTS
December 31, 2023 AND 2022
RevenueZen, LLC
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| Financial Statements: |
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| Independent Auditor’s Report |
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| Balance Sheets |
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| Statements of Operations |
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| Statements of Stockholders' Deficit |
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| Statements of Cash Flows |
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| Notes to Financial Statements |
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Independent Auditor’s Report
To the Members’ and Board of Directors of RevenueZen, LLC
Opinion
We have audited the accompanying financial statements of RevenueZen, LLC which comprise the balance sheets as of December 31, 2023 and 2022, and the related statements of operations, statement of Stockholders’ equity, and cash flows for the years then ended, and the related notes to the financial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of RevenueZen, LLC as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United State of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of RevenueZen, LLC and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards, we:
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| o | Exercise professional judgment and maintain professional skepticism throughout the audit. |
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| o | Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. |
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| o | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of RevenueZen, LLC internal control. Accordingly, no such opinion is expressed. |
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| o | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. |
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| o | Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about RevenueZen, LLC ability to continue as a going concern for a reasonable period of time. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
/S BF Borgers CPA PC
Certified Public Accountants
Lakewood, CO
March 15, 2024
We have served as the Company’s auditor since 2024
| Page 3 |
RevenueZen, LLC
Balance Sheets
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| December 31 2023 |
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| December 31 2022 |
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| ASSETS |
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| Current assets: |
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| Cash |
| $ | 82,762 |
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| $ | 65,785 |
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| Accounts receivable |
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| 8,982 |
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| 126,815 |
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| Prepaids and other current assets |
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| 6,669 |
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| 219,127 |
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| Total current assets |
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| 98,413 |
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| 411,727 |
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| Note receivable – related parties |
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| 20,209 |
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| - |
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| Other assets |
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| 76,650 |
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| 91,650 |
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| Total assets |
| $ | 195,272 |
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| $ | 503,377 |
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| LIABILITIES AND STOCKHOLDERS' EQUITY |
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| Current liabilities: |
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| Accounts payable |
| $ | 10,865 |
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| $ | 6,660 |
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| Accrued expenses |
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| 75,803 |
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| Notes payable – related party |
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| 32,156 |
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| Deferred revenue |
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| 52,273 |
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| Total current liabilities |
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| 118,824 |
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| 58,933 |
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| Total liabilities |
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| 118,824 |
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| 58,933 |
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| Total Members' equity |
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| 76,448 |
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| 444,444 |
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| Total liabilities and members' equity |
| $ | 195,272 |
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| $ | 503,377 |
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See accompanying notes to the financial statements
| Page 4 |
RevenueZen, LLC
Statements of Operations – For the Years Ended December 31, 2023 and 2022
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| REVENUE |
| $ | 1,414,383 |
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| $ | 2,666,912 |
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| Cost of goods sold |
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| (943,398 | ) |
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| (1,506,275 | ) |
| Gross margin |
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| 470,985 |
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| 1,160,637 |
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| OPERATING EXPENSES: |
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| General and administrative |
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| 588,723 |
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| 785,461 |
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| Total operating expenses |
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| 588,724 |
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| 785,461 |
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| Net income (loss) from operations |
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| (117,738 | ) |
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| 375,176 |
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| OTHER EXPENSES: |
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| Interest expense |
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| (3,259 | ) |
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| - |
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| Total other expense |
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| (3,259 | ) |
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| - |
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| NET INCOME (LOSS) |
| $ | (120,997 | ) |
| $ | 375,176 |
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See accompanying notes to the financial statements
| Page 5 |
RevenueZen, LLC
Statements of Members' Equity
For the Years Ended December 31, 2023 and 2022
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| Members’ |
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| Equity |
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| Balance, December 31, 2021 |
| $ | 194,360 |
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| Owner contributions |
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| Owner distributions |
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| (125,092 | ) |
| Net income |
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| 375,176 |
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| Balance, December 31, 2022 |
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| 444,444 |
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| Owner contributions |
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| Owner distributions |
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| (246,999 | ) |
| Net income |
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| (120,997 | ) |
| Balance, December 31, 2023 |
| $ | 76,448 |
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See accompanying notes to the financial statements.
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RevenueZen, LLC
Statements of Cash Flows - For the Years Ended December 31, 2023 and 2022
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| CASH FLOWS FROM OPERATING ACTIVITIES: |
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| Net Income (Loss) |
| $ | (120,997 | ) |
| $ | 375,176 |
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| Adjustments to reconcile net loss to net cash used in operating activities: |
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| Vesting of restricted shares of interactiveX, Inc |
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| (12,900 | ) |
| Changes in operating assets and liabilities: |
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| Accounts receivable |
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| 117,833 |
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| (87,060 | ) |
| Prepaid expenses and other current assets |
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| 212,458 |
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| (205,021 | ) |
| Accounts payable |
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| 4,205 |
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| (13,290 | ) |
| Accrued expenses |
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| 75,803 |
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| Contract liabilities |
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| (52,273 | ) |
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| 12,779 |
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| Net cash provided by operating activities |
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| 237,029 |
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| 69,684 |
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| CASH FLOWS FROM INVESTING ACTIVITIES: |
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| Return of SAFE proceeds |
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| 15,000 |
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| Proceeds from sale of other assets |
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| 26,184 |
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| Repayments of note receivable |
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| 13,871 |
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| Advance of note receivable |
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| (34,080 | ) |
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| Net cash provided by (used in) investing activities |
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| (5,209 | ) |
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| 26,184 |
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| CASH FLOWS FROM FINANCING ACTIVITIES: |
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| Owner distributions |
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| (246,999 | ) |
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| (125,092 | ) |
| Proceeds from loan payable |
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| 69,360 |
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| - |
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| Proceeds from sale of common stock |
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| (37,204 | ) |
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| Net cash used in financing activities |
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| (214,843 | ) |
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| (125,092 | ) |
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| Net change in cash |
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| 16,977 |
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| (29,224 | ) |
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| Cash at beginning of period |
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| 65,785 |
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| 95,009 |
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| Cash at end of period |
| $ | 82,762 |
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| $ | 65,785 |
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| Supplemental disclosure of cash flow information: |
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| Cash paid for interest |
| $ | 3,259 |
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| - |
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| Cash paid for taxes |
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| - |
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| - |
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See accompanying notes to financial statements.
| Page 7 |
RevenueZen, LLC
Notes to Financial Statements
Note 1 - Description of business and summary of significant accounting policies:
RevenueZen, LLC (the “Company”) is an Oregon limited liability Company, who works with Business to Business (“B2B”) brands to grow their organic and referral traffic. In addition, we provide and consult on content marketing services to help convert that traffic into paying customers. Services range from Search Engine Optimization (‘SEO’) to Linkedin marketing.
Basis of presentation
The accompanying financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).
Use of estimates in the preparation of financial statements
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements. The reported amounts of revenues and expenses during the reporting period may be affected by the estimates and assumptions we are required to make. Estimates that are critical to the accompanying financial statements relate principally to the estimated period that course content is provided to customers and the valuation of share-based compensation. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary. It is at least reasonably possible that our estimates could change in the near term with respect to these matters.
Fair value hierarchy
The Company utilizes a valuation technique to measure the fair value of assets and liabilities by using a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs. The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Accordingly, the fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
| · | Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; |
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| · | Level 2 - Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly; |
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| · | Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. |
A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company's assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.
The methodology described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methodology is appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
The Company has no assets or liabilities valued using level 1, level 2, or level 3 inputs as of December 31, 2023 or 2023.
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RevenueZen, LLC
Revenue and cost recognition
The Company recognizes revenue in accordance with ASC 606 when it has satisfied the performance obligations under an arrangement with the customer reflecting the terms and conditions under which products or services will be provided, the fee is fixed or determinable, and collection of any related receivable is probable. ASC Topic 606, “Revenue from Contracts with Customers” establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: 1) identify the contract with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to performance obligations in the contract; and 5) recognize revenue as the performance obligation is satisfied.
The Company’s performance obligation for its revenue stream are to provide content marketing, SEO and social media for customers. Revenues associated with completed sales are recognized at a point in time when they are provided to the customer. There is no financing component to the Company’s sales.
Deferred revenue is recorded when amounts charged to customers are collected in advance of satisfaction of the Company's performance obligations. Deferred revenue totaled $0 and $52,273 at December 31, 2023 and 2022, respectively.
During the years ended December 31, 2023 and 2022, the Company recognized approximately $52,000 and $36,000 in revenue over time as services are delivered and the remaining $0 and $52,000 at a point in time, respectively.
Accounts receivable
Accounts receivable are carried at their estimated collectible amounts. Trade accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial condition. As of December 31, 2023 and 2022 no allowance for receivables has been recorded.
Cash and cash equivalents
For purposes of the statements of cash flows, we consider all highly-liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Concentration of credit risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash. The Company maintains all of its cash in deposit accounts with one financial institution and two reputable payment processing platforms. Cash deposit balances with the financial institution frequently exceed federally-insured limits and amounts held by the payment processing platforms are not insured by FDIC. The Company has not experienced any losses in such accounts.
Impairment of long-lived assets
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured at the amount by which the carrying amount of the assets exceeds the fair value of the assets. There were no impairment charges recognized during the years ended December 31, 2023 and 2022.
Advertising
The Company expenses all advertising costs as incurred. Advertising costs were approximately $15,000 and $30,000 for the years ended December 31, 2023 and 2022, respectively.
Income taxes
The Company accounts for income taxes as a pass through entity, where the owner pays income taxes on it’s share of taxable income. The net profits and losses of the Company are allocated to the members in proportion to each members’ capital interest in the Company. Distributions are made by the Company to the members at such times and in such amounts as the members shall determine in their sole discretion.
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RevenueZen, LLC
Note 2 – Notes receivable – related party:
In July 2023, the Company has issued a note receivable to Ken Marshal, one of its members, for $24,000 which is to be repaid to the Company in 12 equal monthly payments of $2,088, beginning on August 1, 2023 with the last payment due on July 1, 2024. The note bears interest of 8% on the unpaid principal balance. As of December 31, 2023, the remaining balance on the note is $14,232.
The Company has issued a note receivable to Rocky Pedden, one of its members for $10,080 which is to be repaid to the Company in 12 equal monthly payments of $877, beginning on August 1, 2023 with the last payment due on July 1, 2024. The note bears interest of 8% on the unpaid principal balance. As of December 31, 2023, the remaining balance on the note is $5,977.
Note 3 – Note payable – related party:
In July 2023, the Company issued a note payable to Amanda Cyr, one of its members, for $69,360, which is to be repaid in 11 equal monthly payments of $6,560, beginning on August 1, 2023 with the last payment due on June 1, 2024. The note bears interest of 8% on the unpaid principal balance. As of December 31, 2023, the remaining balance on the note is $32,156.
Note 4 – Other Assets:
The Company holds a less than 1% interest in interactiveX, Inc. (doing business as Classavo) which the Company accounts for under the cost method of accounting. The Company received 7,847 restricted shares of common stock with a fair value of $26,650 based on the cash value of services to be performed, pursuant to a consulting agreement in which the shares vest into common shares equally over 12 months. The Company received no distributions for the years ended December 31, 2023 and 2022.
On February 3, 2021, the Company entered into a Simple Agreement for Future Equity (“SAFE”) with Juno Insurance Group, PBC, (“Juno”) for $25,000. The Safe will automatically convert into the number of shares of Safe preferred stock at the conversion rate. During the year ended December 31, 2023, the Company was repaid $15,000 upon the execution of an amendment to the original Safe agreement. As of December 31, 2023 and 2022, the amounts owed to the Company under the Safe from June were $10,000 and $25,000, respectively.
On February 11, 2019, the Company entered into a convertible promissory note with RallyBright, Inc., (“Rally”), for a principal amount of $15,000. The note matures on the earlier of the 24 month anniversary of the note or the completion of a Qualified Financing as defined in the note. Upon maturity, the note will automatically convert into preferred shares based on the conversion price as defined in the note. As of December 31, 2023 and 2022, the amounts owed to the Company under the note was $15,000
On March 8, 2021, the Company entered into a SAFE with Rally for $25,000. The SAFE will automatically convert into the number of shares of SAFE preferred stock at the conversion rate. As of December 31, 2023 and 2022, the amounts owed to the Company under the SAFE from June were $25,000.
Note 5 – Subsequent events:
The Company has evaluated subsequent events through March 15, 2024, which is the date these financial statements were available to be issued. All subsequent events, if any, requiring recognition as of December 31, 2023, have been incorporated into these financial statements.
On December 31, 2023, the Company and Onfolio Holdings Inc. (“Onfolio”) and RevenueZen LLC, a Delaware limited liability company ("RevenueZen Delaware") a subsidiary of Onfolio, entered into and closed an asset purchase agreement (the "Asset Purchase Agreement") with Onfolio, for the purchase of substantially all of the assets utilized in the operation of the Company.
Pursuant to the Asset Purchase Agreement, and subject to the terms and conditions contained therein, at the closing, the Company agreed to sell to Onfolio the business, all as more fully described in the Asset Purchase Agreement. The aggregate purchase price for the purchase was $1,332,000, consisting of $240,000 in cash at closing, $425,000 in Onfolio Series A Preferred Shares, a $440,000 11% interest only secured promissory note made by RevenueZen Delaware due December 31, 2025 (the “Promissory Note”), and additional earn-out payments totaling $227,000 could be paid to RevenueZen pursuant to the earn-out formula described in the Asset Purchase Agreement. In addition, five founders of the Company received a total of a 12% equity interest in RevenueZen Delaware, and they will serve in leadership roles with the RevenueZen Delaware team. Also, certain of the founders received a total of 270,000 non-qualified stock options to purchase Onfolio common shares at $0.51 per share for a period of 10 years pursuant to Onfolio’s 2020 Equity Compensation Plan.
The transaction closed on January 4, 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.
| Page 10 |
EXHIBIT 99.2
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial data are presented to illustrate the effect the December 31, 2023 acquisition by Onfolio Holdings, Inc. (the “Company”), from RevenueZen, LLC, (“RevenueZen”), substantially all of RevenueZen’s assets utilized in the operation of the RevenueZen business (the “Acquired Business”). RevenueZen works with B2B brands to grow their organic and referral traffic. In addition, they provide and consult on content marketing services to help convert that traffic into paying customers. Services range from Search Engine Optimization (‘SEO’) to Linkedin marketing, which will be known as “RevenueZen.”
The following unaudited pro forma combined balance sheet data as of September 30, 2023 is presented as if the Company’s acquisition of the Acquired Business (the “Acquisition”) had occurred on September 30, 2023. The following unaudited pro forma combined statement of operations data for the twelve months ended September 30, 2023 is presented as if the Acquisition occurred on October 1, 2022.
The pro forma adjustments are based upon available information and certain assumptions that the Company believes are reasonable under the circumstances; however, the actual results could differ. The pro forma adjustments are directly attributable to the Acquisition and are expected to have a continuing impact on the results of operations of the Company. Management believes that all adjustments necessary to present fairly the unaudited pro forma combined financial statements have been made. The unaudited pro forma combined financial statements are presented for informational purposes only and are not necessarily indicative of the results of operations that would have resulted had the Acquisition been consummated on the dates indicated, and should not be construed as being representative of the Company’s future results of operations or financial position.
The Acquired Business’ assets, liabilities and results of operations presented herein were derived from the audited financial statements of the Acquired Business for the years ended December 31, 2023 and 2022 (the “Acquired Business Financial Statements”).
The unaudited pro forma combined financial statement data should be read in conjunction with (a) the historical consolidated financial statements and accompanying notes thereto of the Company for the year ended December 31, 2022, which were included in the Company’s Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on April 12, 2023, (the “Annual Statement”), (b) the historical unaudited consolidated quarterly financial statements and accompanying notes thereto of the Company for the nine months ended September 30, 2023, which were included in the Company’s Form 10-Q for the nine months ended September 30, 2023, as filed with the Securities and Exchange Commission on November 14, 2023 and (c) the Acquired Business Financial Statements, which are included as Exhibit 99.1 to this Current Report on Form 8-K/A of which these Unaudited Pro Forma Combined Financial Statements are included as Exhibit 99.2.
The unaudited pro forma combined financial statements included herein constitute forward-looking information and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. See the sections titled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Information” in the Annual Statement and the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, as filed with the Commission on November 14, 2023.
ONFOLIO HOLDINGS, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 2023
|
|
| Consolidated Historical September 30, |
|
| RevenueZen December 31, |
|
| RevenueZen Pro Forma Adjustments |
|
| Combined |
| ||||
|
|
| 2023 |
|
| 2023 |
|
| ( See Notes) |
|
| Pro Forma |
| ||||
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Current Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Cash and cash equivalents |
| $ | 3,373,178 |
|
| $ | 82,762 |
|
|
| (322,762 | ) |
| $ | 3,133,178 |
|
|
|
|
|
|
|
|
|
|
|
|
| (240,000 | )(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (82,762 | )(c) |
|
|
|
|
| Accounts receivable, net |
|
| 97,522 |
|
|
| 8,982 |
|
|
| (8,982 | )(c) |
|
| 97,522 |
|
| Inventory |
|
| 114,492 |
|
|
| - |
|
|
| - |
|
|
| 114,492 |
|
| Prepaid expenses and other current assets |
|
| 121,557 |
|
|
| 6,669 |
|
|
| (6,669 | )(c) |
|
| 121,557 |
|
| Total current assets |
|
| 3,706,749 |
|
|
| 98,413 |
|
|
| (338,413 | ) |
|
| 3,466,749 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Intangible assets |
|
| 3,280,243 |
|
|
| - |
|
|
| 682,000 | (d) |
|
| 3,962,243 |
|
| Goodwill |
|
| 1,165,636 |
|
|
| - |
|
|
| 825,634 | (e) |
|
| 1,991,270 |
|
| Due from related party |
|
| 156,952 |
|
|
| - |
|
|
|
|
|
|
| 156,952 |
|
| Note Receivable - related party |
|
| - |
|
|
| 20,209 |
|
|
| (20,209 | )(c) |
|
| - |
|
| Investment in unconsolidated joint ventures, cost method |
|
| 154,007 |
|
|
| - |
|
| -(c) |
|
|
| 154,007 |
| |
| Investment in unconsolidated joint ventures, equity method |
|
| 274,774 |
|
|
| - |
|
|
|
|
|
|
| 274,774 |
|
| Other Assets |
|
| - |
|
|
| 76,650 |
|
|
| (76,650 | )(c) |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
| TOTAL ASSETS |
|
| 8,738,361 |
|
|
| 195,272 |
|
|
| 1,072,362 |
|
|
| 10,005,995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable and other current liabilities |
|
| 431,189 |
|
|
| 86,668 |
|
|
| (86,668 | )(c) |
|
| 431,189 |
|
| Dividends payable |
|
| 49,341 |
|
|
| - |
|
|
|
|
|
|
| 49,341 |
|
| Acquisition notes payable |
|
| 2,416,323 |
|
|
| - |
|
|
| 314,972 | (b) |
|
| 2,731,295 |
|
| Notes Payable - related party |
|
| - |
|
|
| 32,156 |
|
|
| (32,156 | )(c) |
|
| - |
|
| Contingent consideration |
|
| 60,000 |
|
|
| - |
|
|
| 227,000 | (b) |
|
| 287,000 |
|
| Deferred Revenue |
|
| 228,960 |
|
|
| - |
|
|
| - |
|
|
| 228,960 |
|
| Total current liabilities |
|
| 3,185,813 |
|
|
| 118,824 |
|
|
| 423,148 |
|
|
| 3,727,785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total liabilities |
|
| 3,185,813 |
|
|
| 118,824 |
|
|
| 423,148 |
|
|
| 3,727,785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Member's equity |
|
| - |
|
|
| 76,448 |
|
|
| (76,448 | )(c) |
|
| - |
|
| Preferred stock |
|
| 70 |
|
|
| - |
|
|
| 17 | (b) |
|
| 87 |
|
| Common stock |
|
| 5,110 |
|
|
| - |
|
|
| - |
|
|
| 5,110 |
|
| Additional paid-in capital |
|
| 20,520,807 |
|
|
| - |
|
|
| 544,729 | (b) |
|
| 21,065,536 |
|
| Accumulated other comprehensive income |
|
| 73,910 |
|
|
| - |
|
|
| - |
|
|
| 73,910 |
|
| Retained earnings (accumulated deficit) |
|
| (15,047,349 | ) |
|
| - |
|
|
| - |
|
|
| (15,047,349 | ) |
| Total stockholders' equity Onfolio Holdings, Inc. |
|
| 5,552,548 |
|
|
| 76,448 |
|
|
| 468,298 |
|
|
| 6,097,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NCI |
|
|
|
|
|
|
|
|
|
| 180,916 | (b) |
|
| 180,916 |
|
| Total Equity |
|
| 5,552,548 |
|
|
| 76,448 |
|
|
| 649,214 |
|
|
| 6,278,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
| $ | 8,738,361 |
|
| $ | 195,272 |
|
|
| 1,072,362 |
|
| $ | 10,005,995 |
|
ONFOLIO HOLDINGS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2023
|
|
| Consolidated Historical for the 12 months ended September 30, 2023 |
|
| RevenueZen Historical Year ended December 31, 2023 |
|
| RevenueZen Pro Forma Adjustments |
|
| Pro Forma December 31, 2023 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Revenues |
| $ | 5,098,857 |
|
| $ | 1,414,383 |
|
| $ | - |
|
| $ | 6,513,240 |
|
| Cost of revenues |
|
| 1,940,225 |
|
|
| 943,398 |
|
|
| - |
|
|
| 2,883,623 |
|
| Gross profit |
|
| 3,158,632 |
|
|
| 470,985 |
|
|
| - |
|
|
| 3,629,617 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative expenses |
|
| 6,192,071 |
|
|
| 588,723 |
|
|
| 122,000 | (g) |
|
| 6,902,794 |
|
| Professional Fees |
|
| 991,219 |
|
|
| - |
|
|
| - |
|
|
| 991,219 |
|
| Impairment of intangible assets |
|
| 3,952,516 |
|
|
| - |
|
|
| - |
|
|
| 3,952,516 |
|
| Acquisition costs |
|
| 577,856 |
|
|
| - |
|
|
| - |
|
|
| 577,856 |
|
| Total operating expenses |
|
| 11,713,662 |
|
|
| 588,723 |
|
|
| 122,000 |
|
|
| 12,424,385 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) from operations |
|
| (8,555,030 | ) |
|
| (117,738 | ) |
|
| (122,000 | ) |
|
| (8,794,768 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Equity Method Income |
|
| 23,297 |
|
|
| - |
|
|
| - |
|
|
| 23,297 |
|
| Dividend Income |
|
| 2,511 |
|
|
| - |
|
|
| - |
|
|
| 2,511 |
|
| Interest income (expense), net |
|
| 70,832 |
|
|
| (3,259 | ) |
|
| (79,657 | )(h) |
|
| (12,084 | ) |
| Other income |
|
| 3,715 |
|
|
| - |
|
|
| - |
|
|
| 3,715 |
|
| Impairment of investments |
|
| (108,045 | ) |
|
|
|
|
|
|
|
|
|
| (108,045 | ) |
| Loss on sale of assets |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| Total other income (expense) |
|
| (7,690 | ) |
|
| (3,259 | ) |
|
| (79,657 | ) |
|
| (90,606 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) before income taxes |
|
| (8,562,720 | ) |
|
| (120,997 | ) |
|
| (201,657 | ) |
|
| (8,885,374 | ) |
| Income tax (provision) benefit |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| Net income (loss) |
|
| (8,562,720 | ) |
|
| (120,997 | ) |
|
| (201,657 | ) |
|
| (8,885,374 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dividends on Preferred stock |
|
| (263,545 | ) |
|
| - |
|
|
| (51,000 | ) |
|
| (314,545 | ) |
| Net income (loss) attributable to non-controlling interest |
|
|
|
|
|
|
|
|
|
| 29,160 |
|
|
| 29,160 |
|
| Net income (loss) available to Common Shareholders |
| $ | (8,826,265 | ) |
| $ | (120,997 | ) |
| $ | (223,497 | ) |
| $ | (9,170,759 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
| $ | (1.73 | ) |
|
|
|
|
|
|
|
|
| $ | (1.79 | ) |
| Diluted |
| $ | (1.73 | ) |
|
|
|
|
|
|
|
|
| $ | (1.79 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares used in computing earnings/(loss) per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
| 5,110,195 |
|
|
|
|
|
|
|
|
|
|
| 5,110,195 |
|
| Diluted |
|
| 5,110,195 |
|
|
|
|
|
|
|
|
|
|
| 5,110,195 |
|
ONFOLIO HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
| 1. | DESCRIPTION OF TRANSACTION |
Acquisition of RevenueZen
On December 31, 2023, RevenueZen and the Company and RevenueZen LLC, a Delaware limited liability company ("RevenueZen Delaware") a subsidiary of the Company, entered into and closed an asset purchase agreement (the "Asset Purchase Agreement"), for the purchase by the Company of of the Acquired Business.
Pursuant to the Asset Purchase Agreement, and subject to the terms and conditions contained therein, at the closing, RevenueZen agreed to sell to the Company the Acquired Business, all as more fully described in the Asset Purchase Agreement. The aggregate purchase price for the Acquired Business was $1,332,000, consisting of $240,000 in cash at closing, $425,000 in Company Series A Preferred Shares, a $440,000 11% interest only secured promissory note made by RevenueZen Delaware due December 31, 2025 (the “Promissory Note”), and additional earn-out payments totalling $227,000 could be paid to RevenueZen pursuant to the earn-out formula described in the Asset Purchase Agreement. In addition, five founders of the RevenueZen received a total of a 12% equity interest in RevenueZen Delaware, and they will serve in leadership roles with the RevenueZen Delaware team. Also, certain of the founders received a total of 270,000 non-qualified stock options to purchase Company common shares at $0.51 per share for a period of 10 years pursuant to the Company’s 2020 Equity Compensation Plan.
The transaction closed on January 4, 2024, when consideration was transferred by the Company and control was obtained by the Company and will be accounted for as a business combination under ASC 805.
| 2. | BASIS OF PRESENTATION |
The accompanying unaudited pro forma combined financial statements are based on the Company’s and the Acquired Business’ historical financials as adjusted to give effect to the pro forma adjustments necessary to reflect the Acquisition. The unaudited pro forma combined statement of operations for the twelve months ended September 30, 2023, gives effect to the Acquired Business’ as if it had occurred on January 1, 2023 and the pro forma combined balance sheet as of December 31, 2023 gives effect to the Acquisition as if it had occurred on December 31, 2023. The historical financials for the twelve months ended September 30, 2023 of the Company were derived as follows:
|
|
| Historical Nine Months Ended September 30, 2023 |
|
| Plus: Historical Year Ended December 31, 2022 |
|
| Less: Historical Nine Months ended September 30, 2022 |
|
| Total Twelve Months Ended September 30, 2023 |
| ||||
|
|
|
|
|
| ||||||||||||
| Revenues |
| $ | 3,975,088 |
|
| $ | 2,219,815 |
|
| $ | 1,096,046 |
|
| $ | 5,098,857 |
|
| Cost of revenues |
|
| 1,568,589 |
|
|
| 1,021,362 |
|
|
| 649,726 |
|
|
| 1,940,225 |
|
| Gross profit |
|
| 2,406,499 |
|
|
| 1,198,453 |
|
|
| 446,320 |
|
|
| 3,158,632 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative expenses |
|
| 4,724,357 |
|
|
| 4,271,865 |
|
|
| 2,804,151 |
|
|
| 6,192,071 |
|
| Professional Fees |
|
| 843,910 |
|
|
| 509,941 |
|
|
| 362,632 |
|
|
| 991,219 |
|
| Impairment of intangible assets |
|
| 3,952,516 |
|
|
| - |
|
|
| - |
|
|
| 3,952,516 |
|
| Acquisition costs |
|
| 285,532 |
|
|
| 527,792 |
|
|
| 235,468 |
|
|
| 577,856 |
|
| Total operating expenses |
|
| 9,806,315 |
|
|
| 5,309,598 |
|
|
| 3,402,251 |
|
|
| 11,713,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) from operations |
|
| (7,399,816 | ) |
|
| (4,111,145 | ) |
|
| (2,955,931 | ) |
|
| (8,555,030 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Equity Method Income |
|
| 14,921 |
|
|
| 34,432 |
|
|
| 26,056 |
|
|
| 23,297 |
|
| Dividend Income |
|
| 1,610 |
|
|
| 3,193 |
|
|
| 2,292 |
|
|
| 2,511 |
|
| Interest income (expense), net |
|
| 68,989 |
|
|
| (2,152 | ) |
|
| (3,995 | ) |
|
| 70,832 |
|
| Other income |
|
| 2,937 |
|
|
| 13,223 |
|
|
| 12,445 |
|
|
| 3,715 |
|
| Loss on sale of assets |
|
| - |
|
|
| (34,306 | ) |
|
| (34,306 | ) |
|
| - |
|
| Impairment of investments |
|
| - |
|
|
| (137,602 | ) |
|
| (29,557 | ) |
|
| (108,045 | ) |
| Total other income (expense) |
|
| 88,457 |
|
|
| (123,212 | ) |
|
| (123,212 | ) |
|
| (7,690 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) before income taxes |
|
| (7,311,359 | ) |
|
| (4,234,357 | ) |
|
| (2,982,996 | ) |
|
| (8,562,720 | ) |
| Income tax (provision) benefit |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| Net income (loss) |
|
| (7,311,359 | ) |
|
| (4,234,357 | ) |
|
| (2,982,996 | ) |
|
| (8,562,720 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dividends on Preferred stock |
|
| (155,500 | ) |
|
| (195,145 | ) |
|
| (137,305 | ) |
|
| (263,545 | ) |
| Net income (loss) attributable to non-controlling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) available to Common Shareholders |
| $ | (8,826,265 | ) |
| $ | (4,429,502 | ) |
| $ | (3,120,301 | ) |
| $ | (8,826,265 | ) |
| 3. | PRELIMINARY PURCHASE PRICE ALLOCATIONS |
The preliminary purchase price for the Acquired Business has been allocated to the assets acquired and liabilities assumed for purposes of this pro forma financial information based on their estimated relative fair values. The purchase price allocations herein are preliminary. The final purchase price allocations for the Acquired Business will be determined after completion of a thorough analysis to determine the fair value of all assets acquired and liabilities assumed but in no event later than one year following completion of the Acquisition. Accordingly, the final acquisition accounting adjustments could differ materially from the accounting adjustments included in the pro forma financial statements presented herein. Any increase or decrease in the fair value of the assets acquired and liabilities assumed, as compared to the information shown herein, could also change the portion of purchase price allocable to goodwill and could impact the operating results of the Company following the Acquisition due to differences in purchase price allocation, depreciation and amortization related to some of these assets and liabilities.
Preliminary Purchase Price Allocation
The Acquisition is being accounted for as a business combination under Financial Accounting Standards Board Accounting Standards Codification (ASC) 805. The following information summarizes the provisional purchase consideration and preliminary allocation of the fair values assigned to the assets at the purchase date:
| Preliminary Purchase Price: |
|
|
| |
|
|
|
|
| |
| Cash |
| $ | 240,000 |
|
| Promissory Note, net of discount |
|
| 440,000 |
|
| Common stock options |
|
| 119,745 |
|
| Preferred Shares |
|
| 425,000 |
|
| Contingent Consideration, Earn-out provision |
|
| 227,000 |
|
| Total preliminary purchase consideration |
|
| 1,326,718 |
|
|
|
|
|
|
|
| Preliminary Purchase Price Allocation |
|
|
|
|
| Website domains |
| $ | 150,000 |
|
| Customer relationships |
|
| 452,000 |
|
| Trademarks and trade names |
|
| 75,000 |
|
| Non-compete agreement |
|
| 5,000 |
|
| Goodwill |
|
| 825,634 |
|
| Net assets acquired |
| $ | 1,507,634 |
|
| 4. | PRO FORMA ADJUSTMENTS |
The unaudited pro forma combined statements of operations and balance sheets reflect the effect of the following pro forma adjustments:
| (a) | Net pro forma impact to cash as follows: |
| Cash paid to sellers of RevenueZen |
| $ | (240,000 | ) |
| Net pro forma impact to cash |
| $ | (240,000 | ) |
| (b) | Other consideration given for asset acquisitions consisting of: |
| Note payable bearing interest at 11% per annum with a maturity date of Dec 31, 2025 |
| $ | 440,000 |
|
| Discount on note payable |
|
| (125,028 | ) |
| Common stock purchase options, exercise price of $0.51, term of 10 years, vesting immediately |
|
| 119,746 |
|
| Earn-out provision to be earned pursuant to the RevenueZen purchase agreement |
|
| 227,000 |
|
| Preferred shares |
|
| 425,000 |
|
| Total other consideration given |
| $ | 1,326,718 |
|
| (c) | Elimination of historical assets and liabilities not acquired.. |
| (d) | Estimated Fair Value of intangible assets acquired . |
| (e) | Estimated Fair Value of goodwill acquired . |
| (g) | Estimated intangible assets amortization of acquired intangible assets. |
| (h) | Estimated interest from new promissory notes issued as consideration to the sellers of the Acquired Business. |
| (i) | Estimated dividends from new preferred shares issued as consideration to the sellers of the Acquired Business. |
| (j) | Estimated net loss attributable to the non-controlling interest issued as consideration to the sellers of the Acquired Business. |