Onfolio Holdings Inc. Announces Fourth Quarter and Year-End 2023 Financial Results and Provides Corporate Update

Rhea-AI Summary

Onfolio Holdings Inc. announces its financial results for Q4 and full year 2023, highlighting revenue growth, gross profit increase, and decreased net loss. The company completed the acquisition of RevenueZen and a joint venture to acquire more B2B marketing agencies. Despite facing challenges in raising capital, Onfolio is optimistic about achieving profitability through strategic acquisitions and expense reduction.

Insights

Financial Analyst

Onfolio Holdings Inc.'s recent financial report indicates a notable year-over-year revenue growth of 136%, which is substantial for investors evaluating the company's growth trajectory. The increase in gross profit by 171% aligns with the revenue growth, suggesting improved operational efficiencies. However, the net loss to common shareholders also increased by 89%, which might raise concerns about the company's profitability path.

The reduction in operating expenses by 12% in the fourth quarter is a positive indicator of cost management, which is essential for achieving profitability. The capital raised through Series A preferred shares and promissory notes reflects a strategic move to avoid equity dilution, which is often appreciated by existing shareholders. The acquisition of RevenueZen could potentially contribute to future revenue streams, but investors should monitor the integration and performance of this acquisition closely.

Despite the growth in revenue and gross profit, the company's cash position has decreased significantly from $6.70M to $0.98M year-over-year, which might indicate liquidity risks. Investors should consider the company's strategies for extending its financial runway and the potential impact of the Onfolio Agency SPV offering on future capital structure and acquisition capabilities.

Market Research Analyst

The online business sector is experiencing a shift due to the broader economic climate, affecting both Onfolio Holdings and its acquisition targets. Onfolio's strategy to acquire cashflow with less up-front capital could be a smart move in a market where capital is scarce and acquisition targets may be more willing to accept favorable deal structures.

The company's focus on B2B marketing agencies, such as the recent acquisition of RevenueZen, indicates a strategic emphasis on sectors with strong online presence and potential for scalable growth. The joint venture with private investors to acquire more agencies could be a lever for growth, but it's important to scrutinize the terms and potential returns of such ventures.

Investors should be aware of the risks associated with aggressive acquisition strategies, particularly in terms of integration challenges and the impact on the company's cash flow. The company's ability to turn these acquisitions into profitable assets will be critical in validating the effectiveness of its growth strategy.

Economist

The economic environment that Onfolio Holdings Inc. operates in has been marked by capital scarcity, which has a dual impact on the company. While it may hinder the ability to raise funds, it also presents an opportunity to acquire companies at lower valuations. The company's estimation of needing $1M to $1.5M to reach profitability, down from the previously anticipated $5-$10M, reflects an adjustment to market conditions that could benefit the company if managed effectively.

The shift towards using debt financing to avoid shareholder dilution is indicative of a strategic balance between growth and shareholder value. However, the company's modest revenues and limited history could make debt financing more expensive or difficult to obtain, impacting its financial flexibility.

From an economic standpoint, Onfolio's strategy to become free cash flow positive is essential for long-term sustainability. But the reliance on external capital raises and joint ventures introduces external dependencies that could affect the company's financial stability if market conditions change or if expected cash flows from acquisitions do not materialize as planned.

WILMINGTON, Del., April 02, 2024 (GLOBE NEWSWIRE) -- Onfolio Holdings Inc. (NASDAQ: ONFO, ONFOW) ("Onfolio" or the "Company"), a holding company that acquires and manages a diversified portfolio of online businesses across a broad range of verticals, announces financial results for the fourth quarter and full year ended December 31, 2023. The Company's Annual Report Form 10-K was filed with the Securities and Exchange Commission on April 1, 2024 and is available on the SEC's website at www.sec.gov.

Recent Corporate Highlights

• Completed the acquisition of RevenueZen, a provider of B2B marketing services with a strong reputation and search engine presence, in January 2024
• Completed a Reg D Preferred Shares Raise, in late 2023.
• Launched a $2.5MM joint venture with private investors to acquire more B2B marketing agencies aimed at helping ONFO reach profitability, in March 2024.
  

Fourth Quarter and Year End 2023 Financial Highlights

• Fourth quarter revenue grew 13% to $1.27M vs. $1.12M in the prior year period and vs. $1.31M in 3Q23
• Fourth quarter gross profit grew 11% to $0.84M vs. $0.75M in the prior year period and vs. $0.85M in 3Q23
• Fourth quarter total operating expenses decreased 12% to $1.67M vs. $1.91M in the prior year period and vs. $5.59M in 3Q23
• Fourth quarter net loss to common shareholders decreased to $0.9M vs. $1.36M in the prior year period and vs. $4.79M in 3Q23
• Revenue grew 136% YOY to $5.24M in 2023 vs. $2.22M in 2022
• Gross profit grew 171% to $3.24M vs $1.20M in 2022
• Total cash operating expenses grew 116% to $11.48M vs. $5.31M in 2022
• Net loss to common shareholders grew 89% to $8.37M vs. a net loss of $4.43M in 2022
• Cash at 12/31/23 was $0.98M vs. $6.70M at 12/31/22
  

“The 4^th Quarter 2023 saw us raise additional capital via Series A preferred shares and promissory notes, which we used to close on an acquisition on 1/1/24, and continue our efforts to reduce expenses and become lean. While we made significant progress, and those efforts have continued to lead to improved results in Q1 of 2024 as well, we acknowledge that there is still more work to be done,” commented Onfolio CEO Dominic Wells.

“2023 was a formative year for us as we navigated our first full year as a public company. The operational results improved considerably as the year went on, and this was reflected gradually in our financial results, although not at the pace we would’ve like to see.

“We spent 2023 addressing our lack of profitability by improving our operational efficiencies, and by exploring capital raising strategies beneficial to shareholders, favouring debt over additional equity to avoid dilution.

“We were met with several headwinds in this area – our modest revenues and limited history meant that we were receiving capital offers for insufficient amounts or prohibitive interest rates, and in many cases both. We opted against capital and terms that would not allow us to buy the accretive cashflow necessary to substantially reduce our ongoing financial burn.

“With substantial revenue growth throughout 2023 versus 2022, and now with a growing history, we are seeing more capital availability, and we’re now assessing optimal ways to extend our financial runway and achieve profitability.

“One such source of capital that is already in process is the joint venture we are pursuing with private accredited investors only to co-invest in upcoming acquisitions (“Onfolio Agency SPV offering”). Information on the Onfolio Agency SPV offering can be found at https://onfospv.com.

“Although the broader economic climate made more funding scarce for us, it has paradoxically brought profitability within closer reach by equally affecting our acquisition targets.

“Earlier, we anticipated needing an additional $5-$10M to acquire enough free cash flow to reach profitability. Now, based on our current pipeline, reduced expenses, and the deal structures we are currently working on, we estimate needing approximately $1M to $1.5M.

“The market's capital shortage means that our target companies require less cash up front as part of the total consideration, have fewer offers from other buyers, and have lower overall asking prices.

“We also don’t need a large sum available to close on each acquisition. Some of them can be acquired for as little as $300,000 cash up front, ranging up to $900,000 for larger transactions. In these acquisitions, the cash up front component is around 30% of the acquisition price, meaning we can acquire cashflow for much less up-front capital than previously.

“Shareholders will note the recent RevenueZen acquisition exemplifies such a favorable deal structure, and so far, we consider the performance of said acquisition in the three months we’ve owned it to be strong.

“We believe the money we raise in the Onfolio Agency SPV offering or through other means, will enable us to acquire the requisite online businesses to attain profitability, and so we feel we are closer than ever to becoming FCF positive and continuing our march forward.

“We are also making progress with our existing portfolio and corporate overheads, continually looking for ways to reduce expenses, grow revenues, and improve profitability, agnostic of new acquisitions. As always, our goal is to reach profitability and scale from there,” concluded Mr Wells.

About Onfolio Holdings

Onfolio Holdings acquires controlling interests in and actively manage small online businesses that we believe (i) operate in sectors with long-term growth opportunities, (ii) have positive and stable cash flows, (iii) face minimal threats of technological or competitive obsolescence and (iv) can be managed by our existing team or have strong management teams largely in place. Through the acquisition and growth of a diversified group of online businesses with these characteristics, we believe we offer investors in our shares an opportunity to diversify their own portfolio risk. Our company excels at finding acquisition opportunities where the seller has not fully optimized their business, and our experience and skillset allows us to add increased value to these existing businesses. Visit www.onfolio.com for more information.

Forward-Looking Statements

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. Examples of forward-looking statements include, among others, statements we make regarding expected operating results, such as revenue growth and earnings, and strategy for growth and financial results.

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: 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 in Item 1A "Risk Factors" in our most recent Form 10-K; other risks to which our company is subject; other factors beyond the company's control. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

For investor inquiries:

investors@onfolio.com

Onfolio Holdings, Inc.
Consolidated Balance Sheets
	December 31				December 31
	2023				2022
Assets
Current Assets:
Cash and cash equivalents	$	982,261			$	6,701,122
Accounts receivable, net	90,070				137,598
Inventory	92,637				105,129
Prepaids and other current assets	111,097				212,180
Total Current Assets	1,276,065				7,156,029
Intangible assets	3,110,204				3,864,618
Goodwill	1,167,194				4,209,126
Due from related party	150,974				111,720
Investment in unconsolidated joint ventures, cost method	154,007				154,007
Investment in unconsolidated joint ventures, equity method	273,042				280,326
Total Assets	$	6,131,483			$	15,775,826
Liabilities and Stockholder’s Equity
Current Liabilities:
Accounts payable and other current liabilities	$	493,816			$	550,454
Dividends payable	68,011				54,404
Acquisition notes payable	17,323				2,456,323
Notes payable	-				68,959
Contingent consideration	60,000				60,000
Deferred revenue	149,965				113,251
Total Current Liabilities	789,115				3,303,391
Total Liabilities	789,115				3,303,391
Commitments and Contingencies
Stockholders' Equity:
Preferred stock, $0.001 per value, 5,000,000 shares authorized
Series A Preferred stock, $0.001 par value, 1,000,000 shares authorized, 92,260 and 69,660 issued and outstanding at December 31, 2023 and 2022;	93				70
Common stock, $0.001 par value, 50,000,000 shares authorized, 5,107,395 issued and outstanding at December 31, 2023 and 2022;	5,108				5,110
Additional paid-in capital	21,107,311				19,950,774
Accumulated other comprehensive income	182,465				96,971
Accumulated deficit	(15,952,609		)		(7,580,490		)
Total Stockholders' Equity	5,342,368				12,472,435
Total Liabilities and Stockholders' Equity	$	6,131,483			$	15,775,826
The accompanying notes are an integral part of these consolidated financial statements

Onfolio Holdings, Inc.
Consolidated Statements of Operations
	For the Year Ended December 31,
	2023				2022
Revenue, services	$	1,496,038			$	544,822
Revenue, product sales	3,743,948				1,674,993
Total Revenue	5,239,986				2,219,815
Cost of revenue, services	837,888				356,957
Cost of revenue, product sales	1,159,267				664,405
Total cost of revenue	1,997,155				1,021,362
Gross profit	3,242,831				1,198,453
Operating expenses
Selling, general and administrative	6,040,688				4,271,865
Professional fees	1,160,410				509,941
Impairment of goodwill and intangible assets	3,952,433				-
Acquisition costs	326,899				527,792
Total operating expenses	11,480,430				5,309,598
Loss from operations	(8,237,599		)		(4,111,145		)
Other income (expense)
Equity method income	13,190				34,432
Dividend income	1,610				3,193
Interest income (expense), net	75,041				(2,152		)
Other income	2,937				13,223
Impairment of investments	-				(137,602		)
Loss on sale of asset	-				(34,306		)
Total other income	92,778				(123,212		)
Loss before income taxes	(8,144,821		)		(4,234,357		)
Income tax (provision) benefit	-				-
Net loss	(8,144,821		)		(4,234,357		)
Preferred Dividends	(227,298		)		(195,145		)
Net loss to common shareholders	$	(8,372,119	)		$	(4,429,502	)
Net loss per common shareholder
Basic and diluted	$	(1.64	)		$	(1.35	)
Weighted average shares outstanding
Basic and diluted	5,107,395				3,285,934
The accompanying notes are an integral part of these consolidated financial statements

 

Onfolio Holdings, Inc.
Consolidated Statements of Stockholders' Equity
For the Years Ended December 31, 2023 and 2022
	Preferred Stock, $0.001 Par value					Common Stock, $0.001 Par Value
	Shares		Amount			Shares		Amount			Additional Paid-In Capital			Accumulated Deficit				Accumulated Other Comprehensive Income			Stockholders' Equity
Balance, December 31, 2021	56,800		$	57		2,353,645		$	2,354		$	6,522,381		$	(3,150,988	)		$	-		$	3,373,804
Preferred shares for cash	12,860		13			-		-			321,487			-				-			321,500
Common stock sold for cash	-		-			2,753,750		2,754			12,101,913			-				-			12,104,667
Stock-based compensation	-		-			-		-			944,995			-				-			944,995
Warrants issued for acquisition	-		-			-		-			60,000			-				-			60,000
Preferred dividends	-		-			-		-			-			(195,145		)		-			(195,145		)
Foreign currency translation	-		-			-		-			-			-				96,971			96,971
Net loss	-		-			-		-			-			(4,234,357		)		-			(4,234,357		)
Balance, December 31, 2022	69,660		70			5,107,395		5,108			19,950,776			(7,580,490		)		96,971			12,472,435
Preferred shares for cash	22,600		23			-		-			564,977			-				-			565,000
Stock-based compensation	-		-			-		-			591,558			-				-			591,558
Preferred dividends	-		-			-		-			-			(227,298		)		-			(227,298		)
Foreign currency translation	-		-			-		-			-			-				85,494			85,494
Net loss	-		-			-		-			-			(8,144,821		)		-			(8,144,821		)
Balance, December 31, 2023	92,260		$	93		5,107,395		$	5,108		$	21,107,311		$	(15,952,609	)		$	182,465		$	5,342,368
The accompanying notes are an integral part of these consolidated financial statements

Onfolio Holdings, Inc.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2023 and 2022
	2023				2022
Cash Flows from Operating Activities
Net loss	$	(8,144,821	)		$	(4,234,357	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock-based compensation expense	591,558				944,995
Equity method income	(13,190		)		(34,432		)
Dividends received from equity method investment	20,474				33,488
Impairment of Cost method investment	-				51,894
Loss on sale of asset	-				34,306
Amortization of intangible assets	739,780				124,832
Impairment of intangible assets	3,952,433				-
Net change in:
Accounts receivable	47,528				(122,974		)
Inventory	12,492				8,125
Prepaids and other current assets	101,083				(52,389		)
Accounts payable and other current liabilities	(56,638		)		325,706
Due to joint ventures	(39,251		)		(9,730		)
Deferred revenue	36,714				60,123
Due to related parties	-				(480		)
Net cash used in operating activities	(2,751,838		)		(2,870,893		)
Cash Flows from Investing Activities
Proceeds from sale of intangible assets	-				45,694
Cash paid to acquire businesses	(850,000		)		(4,261,413		)
Investments in joint ventures	-				(67,500)
Net cash used in investing activities	(850,000		)		(4,283,219		)
Cash Flows from Financing Activities
Proceeds from sale of common stock	-				12,104,667
Proceeds from sale of Series A preferred stock	565,000				321,500
Payments of preferred dividends	(213,691		)		(142,239		)
Payment of contribution to joint venture note payable	-				(215,000		)
Payments on acquisition note payable	(2,439,000		)		-
Proceeds from notes payable	-				44,000
Payments on note payables	(68,959		)		(3,555		)
Net cash provided by financing activities	(2,156,650		)		12,109,373
Effect of foreign currency translation	39,627				35,543
Net Change in Cash	(5,718,861		)		4,990,804
Cash, Beginning of  Period	6,701,122				1,710,318
Cash, End of Period	982,261				$	6,701,122
Cash Paid For:
Income Taxes	$	-			$	-
Interest	$	68,938			$	7,082
Non-cash transactions:
Notes payable issued for asset acquisitions	$	-			$	2,439,000
The accompanying notes are an integral part of these consolidated financial statements

FAQ

What are Onfolio Holdings Inc.'s ticker symbols?

Onfolio Holdings Inc.'s ticker symbols are ONFO and ONFOW.

What were Onfolio's fourth quarter revenue and gross profit in 2023?

Onfolio's fourth quarter revenue in 2023 grew 13% to $1.27M, and the gross profit grew 11% to $0.84M.

How much did Onfolio's net loss to common shareholders decrease in the fourth quarter of 2023?

Onfolio's net loss to common shareholders decreased to $0.9M in the fourth quarter of 2023.

What was the total revenue growth percentage for Onfolio in 2023 compared to 2022?

Onfolio's revenue grew 136% year over year to $5.24M in 2023 compared to $2.22M in 2022.

What is the current cash position of Onfolio as of December 31, 2023?

Onfolio's cash at December 31, 2023, was $0.98M.