Onfolio Holdings Inc. Acquires Eastern Standard Business

Rhea-AI Summary

Onfolio Holdings Inc. (Nasdaq: ONFO, ONFOW) has successfully acquired a majority interest in Eastern Standard, , a digital marketing services provider. The acquisition details include:

- Eastern Standard's FY2023 performance: $4,000,000 revenue and $630,000 unaudited adjusted EBITDA
- Onfolio purchased 70% of Eastern Standard for $1,660,000
- Payment structure: $410,000 in Series A Preferred Shares and $1,250,000 in secured promissory notes
- No upfront cash or common shares issued
- Onfolio's Special Purpose Vehicles acquired an additional 20% interest for $500,000

CEO Dominic Wells stated that the company maintains an active pipeline of profitable acquisition targets and expects the Special Purpose Vehicle model and non-convertible Series A Preferred Shares to play a significant role in future acquisitions.

Positive

• Acquisition of 70% stake in Eastern Standard, a profitable digital marketing company
• Eastern Standard generated $4 million in revenue and $630,000 in adjusted EBITDA for FY2023
• Acquisition completed without upfront cash or issuing common shares
• Use of Special Purpose Vehicles to acquire additional 20% stake
• Potential for future acquisitions using the same model

Negative

• Issuance of $410,000 in Series A Preferred Shares
• Creation of $1,250,000 in debt through secured promissory notes

Insights

Financial Analyst

This acquisition marks a significant move for Onfolio Holdings, demonstrating its commitment to expanding its portfolio of online businesses. The purchase of a 70% stake in Eastern Standard for $1,660,000 is structured in a capital-efficient manner, utilizing preferred shares and promissory notes without diluting common shareholders.

Eastern Standard's annual revenue of $4 million and adjusted EBITDA of $630,000 suggest a profitable operation with a healthy 15.75% EBITDA margin. The acquisition price implies a valuation multiple of about 3.8x EBITDA, which appears reasonable for a digital marketing services company.

The use of Special Purpose Vehicles (SPVs) to acquire an additional 20% stake for $500,000 is an innovative approach that could help Onfolio manage risk and potentially attract co-investors. This structure, combined with the non-convertible nature of the financing, indicates a focus on maintaining equity value for existing shareholders while pursuing growth.

Investors should monitor how this acquisition integrates with Onfolio's existing portfolio and whether it can drive synergies or cross-selling opportunities. The company's pipeline of potential acquisitions suggests this could be part of a larger growth strategy, which may positively impact future revenue and earnings.

Market Research Analyst

The acquisition of Eastern Standard positions Onfolio strategically in the digital marketing services sector, which has been experiencing robust growth. Eastern Standard's client roster, including high-profile names like Neil deGrasse Tyson and Cornell Law, suggests a strong market position and potential for attracting premium clients.

The digital marketing industry is projected to continue expanding, driven by increasing online presence of businesses and the growing importance of integrated branding and digital customer experiences. This acquisition aligns Onfolio with these trends, potentially opening up new revenue streams and market opportunities.

The transaction structure, avoiding upfront cash or common share issuance, demonstrates financial prudence and could be viewed favorably by the market. It allows Onfolio to preserve cash for operations or future acquisitions while still executing on its growth strategy.

Investors should consider the potential for Eastern Standard to serve as a platform for further expansion in the digital marketing space, possibly through cross-selling to Onfolio's existing portfolio companies or as a base for bolt-on acquisitions. The company's mention of an active pipeline suggests this could be part of a larger consolidation play in the fragmented digital services market.

WILMINGTON, Del., Oct. 22, 2024 (GLOBE NEWSWIRE) -- Onfolio Holdings Inc. (Nasdaq: ONFO, ONFOW) (the "Company" or "Onfolio"), a company that acquires and manages a diversified portfolio of online businesses, today announced that it has successfully completed the previously disclosed transaction to acquire the majority interest in the assets of Eastern Standard, LLC.

Eastern Standard provides clients with digital marketing services including integrated branding, and digital customer experiences. Their past client roster includes Neil de Grass Tyson, and Cornell Law, among others.

For the fiscal year ended 12/31/2023, Eastern Standard generated approximately $4,000,000 in revenue and $630,000 in unaudited adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”).

Onfolio purchased 70% of Eastern Standard for a total of $1,660,000, through the issuance of $410,000 of Series A Preferred Shares and two secured promissory notes totaling $1,250,000. The acquisition was completed without Onfolio Holdings paying any upfront cash or issuing any common shares, and the Series A Preferred Shares and secured promissory notes issued by Onfolio are not convertible into Onfolio common shares.

Onfolio's Special Purpose Vehicles "Onfolio Agency SPV LLC" and “Onfolio Agency SPV 2, LLC,” paid a combined $500,000 for a 20% interest in the Eastern Standard business.

“We continue to maintain an active pipeline of profitable companies we can acquire and expect that our Special Purpose Vehicle model, along with our non-convertible Series A Preferred Shares, will continue to play an important part of our future acquisitions,” commented Onfolio CEO Dominic Wells.

A Form 8-K relating to the Eastern Standard  transaction was filed with the Securities and Exchange Commission on October 22, 2024 and is available on the SEC’s website at www.sec.gov.

About Eastern Standard

Eastern Standard, a Philadelphia-based combined web and branding agency since 2014, was created to help clients navigate the creation of integrated branding and digital customer experiences. Using a data-first approach, Eastern Standard blends strategy, creativity, and technology to drive end-to-end brand and digital transformation. Visit www.EasternStandard.com to learn more.

About Onfolio Holdings

Onfolio acquires and manages a diversified portfolio of online businesses. Onfolio acquires business that meet its investment criteria, being that such businesses operate in sectors with long-term growth opportunities, have positive and stable cash flows, face minimal threats of technological or competitive obsolescence and can be managed by our existing team or have strong management teams largely in place. The Company excels at finding acquisition opportunities where the seller has not fully optimized their business, and Onfolio's experience and skillset allows it to add increased value to these existing businesses. Visit www.onfolio.com for more information.

Safe Harbor Statement

The information posted in this release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements by use of the words "may," "will," "should," "plans," "explores," "expects," "anticipates," "continues," "estimates," "projects," "intends," and similar expressions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. These risks and uncertainties include, but are not limited to, general economic and business conditions, effects of continued geopolitical unrest and regional conflicts, competition, changes in technology and methods of marketing, delays in completing new customer offerings, changes in customer order patterns, changes in customer offering mix, continued success in technological advances and delivering technological innovations, delays due to issues with outsourced service providers, those events and factors described by us under the caption "Risk Factors" included in our SEC filings and other risks to which our Company is subject, and various other factors beyond the Company's control.

Investor Contact

investors@onfolio.com

FAQ

What company did Onfolio Holdings (ONFO) acquire?

Onfolio Holdings Inc. (ONFO) acquired a majority interest in the assets of Eastern Standard, , a digital marketing services provider.

How much did Onfolio Holdings (ONFO) pay for Eastern Standard?

Onfolio Holdings paid $1,660,000 for a 70% stake in Eastern Standard, using $410,000 in Series A Preferred Shares and $1,250,000 in secured promissory notes.

What was Eastern Standard's revenue and EBITDA for FY2023?

Eastern Standard generated approximately $4,000,000 in revenue and $630,000 in unaudited adjusted EBITDA for the fiscal year ended December 31, 2023.

How did Onfolio Holdings (ONFO) finance the acquisition of Eastern Standard?

Onfolio Holdings financed the acquisition without upfront cash or issuing common shares, using Series A Preferred Shares and secured promissory notes.