Onfolio Holdings Inc. To Acquire DDS Rank Business

Rhea-AI Summary

Onfolio Holdings has agreed to acquire a majority interest in the assets of DDS Rank, a digital marketing service for dentists, expected to close next week. This acquisition will be funded without cash or common shares from Onfolio, through a $600,000 deal involving Series A Preferred Shares and a secured promissory note. DDS Rank generated $310,000 in revenue and $190,000 in EBITDA in 2023. Onfolio plans to double these figures within the next 1 to 2 quarters through enhanced marketing and operational improvements. The acquisition is part of a strategy to achieve profitability without raising additional equity capital.

Positive

• Expected revenue addition of over $310,000 from DDS Rank.
• DDS Rank's projected EBITDA is around $200,000.
• Onfolio anticipates doubling DDS Rank's revenue and EBITDA within 1 to 2 quarters.
• The acquisition will be completed without cash or common shares from Onfolio, avoiding shareholder dilution.
• Series A Preferred Shares and secured promissory notes are not convertible into common shares, maintaining shareholder value.
• Onfolio expects to close another acquisition this month, aiming for near-term profitability.

Negative

• The acquisition involves a $600,000 deal, which includes $200,000 of Series A Preferred Shares and a $200,000 promissory note due in 2026.
• DDS Rank's 2023 revenue and EBITDA figures are unaudited and adjusted.
• The acquisition relies on the performance improvements that are not guaranteed.

Insights

Financial Analyst

Evaluating the Financial Prospects: Onfolio Holdings Inc.'s acquisition of DDS Rank is a strategic move aimed at bolstering its revenue and EBITDA. DDS Rank's current performance, with $310,000 in revenue and $190,000 in EBITDA, is modest. However, Onfolio's projection to double these metrics within 1-2 quarters is ambitious and hinges on effective marketing and operational improvements. The acquisition cost, largely structured with preferred shares and a promissory note, minimizes immediate cash outflow, alleviating pressure on Onfolio's liquidity. This structure also avoids equity dilution, a positive for current shareholders. However, the reliance on preferred shares and promissory notes introduces fixed obligations which, if DDS Rank underperforms, could strain Onfolio's financial flexibility. Investors should evaluate Onfolio's past integration success and the feasibility of its growth projections.

Rating: 1

Market Research Analyst

Market Positioning and Potential: DDS Rank operates in the digital marketing sector for dental practices, a niche yet growing segment. The company's services, including SEO and web design, are important for dental practices seeking to attract and retain clients in an increasingly digital marketplace. Onfolio's confidence in doubling DDS Rank's revenue and EBITDA suggests an untapped market potential. However, the competitive landscape of digital marketing services should not be underestimated. Success will depend on DDS Rank's ability to differentiate itself in a crowded market. Investors should consider the competitive strategy Onfolio plans to implement and any synergies with its existing portfolio businesses.

Rating: 1

DDS Rank is expected to add more than $310,000 in revenue and generate around $200,000 in earnings before interest, taxes, depreciation and amortization.

WILMINGTON, Del., June 07, 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 entered into an agreement to acquire the majority interest in the assets of SEO Marketing Inc. doing business as “DDS Rank.” The company expects the acquisition to close early next week.

The acquisition was made possible with the assistance of Onfolio’s Special Purpose Vehicle “Onfolio Agency SPV LLC,” which is taking a minority interest in the business.

DDS Rank provides dentists with digital marketing services including search-engine optimization, paid advertising, and web design. During 2023, DDS Rank generated approximately $310,000 in revenue and $190,000 in unaudited adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”).

Onfolio believes that within the next 1 or 2 fiscal quarters, it can double the revenue and EBITDA of DDS rank through increased marketing efforts and operational improvements.

“DDS Rank was an obvious acquisition for us. While it is much smaller than our next anticipated acquisition and other acquisition candidates in our pipeline, it has very significant untapped potential,” commented Onfolio CEO Dominic Wells. “We believe we can increase annualized revenue to more than $600,0000 and EBITDA to more than $400,000 in a matter of months.”

On the deal structure, Wells added, “We’re completing this acquisition without investing any cash or common shares from Onfolio Holdings.”

The purchase price is $600,000. Our special purpose vehicle, which continues to raise capital that is not dilutive to Onfolio shareholders, is investing $200,000 in exchange for 34% of DDS Rank. Onfolio will own 66% of DDS Rank in exchange for $200,000 of Series A Preferred Shares and through a secured promissory note for $200,000 due on May 31, 2026.”

The Series A Preferred Shares and secured promissory notes issued by Onfolio pay dividends and interest and are not convertible into Onfolio common shares.

“We have negotiated several acquisitions with structures similar to the DDS Rank transaction and have enough capital to close because of our special purpose vehicle non-dilutive funding,” said Dom Wells, “We expect to close another acquisition this month and achieve profitability near term.”

“We now have a clear path and timeline to profitability, without the need for raising any additional equity capital,” concluded Dom Wells.

About DDS Rank

DDS Rank helps dentists increase their website traffic through search engine optimization and paid advertising. Approximately 91% of the company’s revenues are subscription-based recurring revenue. The company excels at helping dentists improve search engine visibility and web traffic, resulting in more appointments and visits to their clinics. Visit www.ddsrank.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 is the expected revenue addition from DDS Rank to Onfolio Holdings?

DDS Rank is expected to add more than $310,000 in revenue to Onfolio Holdings.

What are the projected earnings for DDS Rank after the acquisition?

DDS Rank is expected to generate around $200,000 in earnings (EBITDA) after the acquisition.

When is the acquisition of DDS Rank expected to close?

The acquisition of DDS Rank is expected to close early next week.

How is Onfolio Holdings funding the acquisition of DDS Rank?

The acquisition is funded through Series A Preferred Shares and a secured promissory note, avoiding cash or common shares investment from Onfolio.

What are Onfolio Holdings' plans for DDS Rank's revenue and EBITDA?

Onfolio Holdings plans to double DDS Rank's revenue and EBITDA within 1 to 2 quarters through increased marketing and operational improvements.

Will the acquisition of DDS Rank dilute Onfolio Holdings shareholders?

No, the acquisition will not dilute Onfolio Holdings shareholders as it avoids the use of common shares.

What is the total purchase price for the acquisition of DDS Rank?

The total purchase price for DDS Rank is $600,000.

What percentage of DDS Rank will Onfolio Holdings own after the acquisition?

Onfolio Holdings will own 66% of DDS Rank after the acquisition.

What is the maturity date for the secured promissory note issued for the acquisition?

The secured promissory note issued for the acquisition is due on May 31, 2026.

Will the Series A Preferred Shares and secured promissory notes be convertible into Onfolio common shares?

No, the Series A Preferred Shares and secured promissory notes are not convertible into Onfolio common shares.