WILMINGTON, Del., April 12, 2023 (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, 2022. The Company's Annual Report Form 10-K was filed with the Securities and Exchange Commission on April 10, 2023 and is available on the SEC's website at www.sec.gov.
Recent Corporate Highlights
- Completed the acquisition of Contentellect, a provider of software that allows SMBs to scale their content with blog writing and link building, in February 2023
- Completed the acquisition of BWPS (Prevent Direct Access and Password Protect WordPress), a developer of security plugins that allow bloggers, creators, agencies, and SMBs to protect their digital assets, products, and content, in October 2022
- Completed the acquisition of Proofread Anywhere, a provider of extensive online resources in the form of courses, workshops, and blog posts for readers looking to train and become professional proofreaders, in October 2022
- Completed the acquisition of SEOButler Ltd, a provider of extensive services within the SEO niche, including content, guest posting, social signals, and citations, in October 2022
Fourth Quarter and Year End 2022 Financial Highlights
- Fourth quarter revenue grew 159% to $1.12M vs. $0.43M in the prior year period and vs. $0.35M in 3Q22
- Fourth quarter gross profit grew 340% to $0.75M vs. $0.17M in the prior year period and vs. $0.14M in 3Q22
- Fourth quarter total operating expenses increased 99% to $1.91M vs. $0.96M in the prior year period and vs. $1.12M in 3Q22
- Fourth quarter net loss to common shareholders expanded to $1.31M vs. $0.81M in the prior year period and vs. $1.02M in 3Q22
- Revenue grew 23% YOY to $2.22M in 2022 vs. $1.81M in 2021
- Gross profit grew 63% to $1.20M in 2022 vs. $0.74M in 2021
- Total operating expenses grew 98% to $5.31M vs. $2.69M in 2021
- Net loss to common shareholders grew 121% to $4.43M vs. a net loss of $2.01M in 2021
- Cash at 12/31/22 was $6.70M vs. $1.71M at 12/31/21
"In many respects, the fourth quarter of 2022 marked a transition from what we might consider Onfolio 1.0 to Onfolio 2.0. In our view, Onfolio 1.0 was marked by the roughly two dozen initial acquisitions that comprise our legacy web businesses and properties that are focused on content generation and media publishing," commented Onfolio CEO Dominic Wells. "While these foundational acquisitions represented the launch of Onfolio, they collectively lacked the necessary scale to get us to profitability and were too often subjected to the vagaries of online search ranking algorithms. Subsequently, using a portion of the proceeds from our August 2022 IPO, we made three pivotal acquisitions - SEOButler Ltd., Proofread Anywhere, and BWPS - in October 2022 that brought more scale and diversification to our portfolio. These are the first three acquisitions under our new Onfolio 2.0 strategy, which is defined by our increased focus on service businesses, agencies, and ecommerce opportunities, such as online courses and digital products, which aren't as susceptible to online search ranking algorithms and have higher recurring revenue.
"In fact, these three acquisitions helped us generate more revenue in the fourth quarter than in the first three quarters of 2022 combined. Our revenue grew $771,000 sequentially from 3Q22 to 4Q22, and given the nature of the subscription revenue from our BWPS acquisition that we ratably recognize over the subsequent 12 month period, one could view our incremental revenue in 4Q22 as being understated. Furthermore, due to our relatively flat organizational structure and the high-margin nature of the acquired revenue, our incremental revenue generated an incremental $617,000 in gross profit, representing an incremental 82% gross margin. Our ability to identify profitable and/or cash flow positive business targets, acquire these businesses at modest prices, grow these businesses over time, and successfully manage these businesses ourselves using a modest sized team is at the very foundation of our corporate strategy. To wit, in February 2023 we closed our asset purchase agreement with Contentellect, which we expect to bring us even closer to profitability.
"Our goal is to build our scale and leverage our team through continuously adding profitable online businesses that can be purchased for a total price of $1M to $5M each. We believe there are thousands of such businesses and that we have the proper industry contacts to successfully act upon such a deep pipeline of potential targets.
"In terms of our reporting, there were a number of expenses recognized in the fourth quarter that skewed our total expenses higher but that aren't recurring or reflective of our forward total operating expense run-rate. For instance, the three acquisitions closed in October carried approximately $300k in total acquisition costs that won't be seen in subsequent quarters. Additionally, we believe that the acquisition costs for most future acquisitions will not be quite as high as what was seen in 4Q22 per transaction, as most additional acquisitions will not require formal audits like the three acquisitions in 4Q22 did. There were also higher legal and professional fees seen in 4Q22, some of which carried over from 3Q22, and we also recognized some severance costs in 4Q22 due to headcount reduction. Thus, the total expenses of $1.91M we recognized in 4Q22 were higher than they would have been without these factors. It is also worth considering that approximately $100,000 of incremental operating expenses in 4Q22 are amortization costs and, thus, non-cash in nature. We are encouraged by the incremental gross profit seen from the incremental revenue in 4Q22 and the added contribution we expect in 1Q23 and beyond from the acquisition of Contentellect and are optimistic about our path to profitability without having to first conduct another equity offering.
"Despite a cash balance of $6.7 million, which, in the absence of any future acquisitions, would be sufficient for our operations in 2023, we are exploring non-dilutive financing opportunities that could be used to further drive our Onfolio 2.0 acquisition strategy and, presumably, quicken our path to profitability. We expect that our competitive advantages and strategic direction will deliver financial growth and value creation for shareholders," concluded Mr. Wells.
About Onfolio Holdings
Onfolio acquires and manages a diversified portfolio of online businesses across a broad range of verticals, each with a niche content focus and brand identity. 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.
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 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. 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: |
| CORE IR |
| investors@onfolio.com |
| 516-222-2560 |
Note: Financial Statements to follow:
| Onfolio Holdings, Inc. | |||||||
| Audited Consolidated Balance Sheets | |||||||
| For the Years Ended December 31, 2022 and 2021 | |||||||
| December 31 | December 31 | ||||||
| 2022 | 2021 | ||||||
| Assets | |||||||
| Current Assets: | |||||||
| Cash | $ | 6,701,122 | $ | 1,710,318 | |||
| Accounts receivable, net | 137,598 | 14,624 | |||||
| Inventory | 105,129 | 98,397 | |||||
| Prepaids and other current assets | 212,180 | 159,791 | |||||
| Total Current Assets | 7,156,029 | 1,983,130 | |||||
| Intangible assets | 3,864,618 | 1,388,260 | |||||
| Goodwill | 4,209,126 | - | |||||
| Due from related party | 111,720 | 51,095 | |||||
| Investment in unconsolidated joint ventures, cost method | 154,007 | 138,401 | |||||
| Investment in unconsolidated joint ventures, equity method | 280,326 | 279,382 | |||||
| Total Assets | $ | 15,775,826 | $ | 3,840,268 | |||
| Liabilities and Stockholders Equity | |||||||
| Current Liabilities: | |||||||
| Accounts payable and other current liabilities | $ | 550,454 | $ | 222,543 | |||
| Dividends payable | 54,404 | 1,498 | |||||
| Due to joint ventures | - | 9,105 | |||||
| Acquisition notes payable | 2,456,323 | 17,323 | |||||
| Notes payable | 68,959 | 28,514 | |||||
| Due to related parties | - | 480 | |||||
| Contingent consideration | 60,000 | - | |||||
| Deferred revenue | 113,251 | 32,000 | |||||
| Total Current Liabilities | 3,303,391 | 311,463 | |||||
| Due to joint ventures - long term | - | 155,000 | |||||
| Total Liabilities | 3,303,391 | 466,463 | |||||
| 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, 69,660 and 56,800 issued and outstanding at September 30, 2022 and December 31, 2021, respectively | 70 | 57 | |||||
| Common stock, $0.001 par value, 50,000,000 shares authorized, 5,110,195 and 2,353,645 issued and outstanding at December 31, 2022 and December 31, 2021, respectively | 5,110 | 2,354 | |||||
| Additional paid-in capital | 19,950,774 | 6,522,382 | |||||
| Accumulated other comprehensive income | 96,971 | - | |||||
| Accumulated deficit | (7,580,490 | ) | (3,150,988 | ) | |||
| Total Stockholders' Equity | 12,472,435 | 3,373,805 | |||||
| Total Liabilities and Stockholders' Equity | $ | 15,775,826 | $ | 3,840,268 | |||
| Onfolio Holdings, Inc. | ||||||||
| Audited Consolidated Statements of Operations | ||||||||
| For the Years Ended December 31, 2022 and 2021 | ||||||||
| For the Year Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenue, services | $ | 544,822 | $ | 507,532 | ||||
| Revenue, product sales | 1,674,993 | 1,301,011 | ||||||
| Total Revenue | 2,219,815 | 1,808,543 | ||||||
| Cost of revenue, services | 356,957 | 447,325 | ||||||
| Cost of revenue, product sales | 664,405 | 626,185 | ||||||
| Total cost of revenue | 1,021,362 | 1,073,510 | ||||||
| Gross profit | 1,198,453 | 735,033 | ||||||
| Operating expenses | ||||||||
| Selling, general and administrative | 4,271,865 | 2,479,152 | ||||||
| Professional fees | 509,941 | 208,193 | ||||||
| Acquisition costs | 527,792 | - | ||||||
| Total operating expenses | 5,309,598 | 2,687,345 | ||||||
| Loss from operations | (4,111,145 | ) | (1,952,312 | ) | ||||
| Other income (expense) | ||||||||
| Equity method income | 34,432 | 50,684 | ||||||
| Dividend income | 3,193 | 9,970 | ||||||
| Interest income (expense), net | (2,152 | ) | (9,805 | ) | ||||
| Other income | 13,223 | - | ||||||
| Impairment of investments | (137,602 | ) | - | |||||
| Loss on sale of asset | (34,306 | ) | - | |||||
| Total other income | (123,212 | ) | 50,849 | |||||
| Loss before income taxes | (4,234,357 | ) | (1,901,463 | ) | ||||
| Income tax (provision) benefit | - | 1,314 | ||||||
| Net loss | (4,234,357 | ) | (1,900,149 | ) | ||||
| Preferred Dividends | (195,145 | ) | (106,825 | ) | ||||
| Net loss to common shareholders | $ | (4,429,502 | ) | $ | (2,006,974 | ) | ||
| Net loss per common shareholder | ||||||||
| Basic and diluted | $ | (1.35 | ) | $ | (0.96 | ) | ||
| Weighted average shares outstanding | ||||||||
| Basic and diluted | 3,285,934 | 2,080,733 | ||||||
| Onfolio Holdings, Inc. | |||||||
| Audited Consolidated Statements of Cash Flows | |||||||
| For the Years Ended December 31, 2022 and 2021 | |||||||
| 2022 | 2021 | ||||||
| Cash Flows from Operating Activities | |||||||
| Net loss | (4,234,357 | ) | $ | (1,900,148 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
| Deferred tax expense (benefit) | - | (1,314 | ) | ||||
| Stock-based compensation expense | 944,995 | 768,030 | |||||
| Equity method income | (34,432 | ) | (50,684 | ) | |||
| Dividends received from equity method investment | 33,488 | 63,798 | |||||
| Impairment of Cost method investment | 51,894 | - | |||||
| Loss on sale of asset | 34,306 | - | |||||
| Amortization of intangible assets | 124,832 | - | |||||
| Net change in: | |||||||
| Accounts receivable | (122,974 | ) | 39,277 | ||||
| Inventory | 8,125 | (58,806 | ) | ||||
| Prepaids and other current assets | (52,389 | ) | (142,110 | ) | |||
| Accounts payable and other current liabilities | 325,706 | 185,651 | |||||
| Due to joint ventures | (9,730 | ) | (7,532 | ) | |||
| Deferred revenue | 60,123 | 3,000 | |||||
| Due to related parties | (480 | ) | (39,643 | ) | |||
| Net cash used in operating activities | (2,870,893 | ) | (1,140,481 | ) | |||
| Cash Flows from Investing Activities | |||||||
| Proceeds from sale of intangible assets | 45,694 | 75,000 | |||||
| Purchase of intangible assets | - | (784,000 | ) | ||||
| Cash paid to acquire businesses | (4,261,413 | ) | - | ||||
| Advances to related parties | - | (9,526 | ) | ||||
| Investments in joint ventures | (67,500 | ) | (49,401 | ) | |||
| Net cash used in investing activities | (4,283,219 | ) | (767,927 | ) | |||
| Cash Flows from Financing Activities | |||||||
| Proceeds from sale of common stock | 12,104,667 | 2,010,000 | |||||
| Proceeds from sale of Series A preferred stock | 321,500 | 1,415,000 | |||||
| Payments of preferred dividends | (142,239 | ) | (105,327 | ) | |||
| Payment of contribution to joint venture note payable | (215,000 | ) | (60,000 | ) | |||
| Payments on acquisition note payable | - | (191,170 | ) | ||||
| Proceeds from notes payable | 44,000 | 108,000 | |||||
| Payments on note payables | (3,555 | ) | (79,486 | ) | |||
| Net cash provided by financing activities | 12,109,373 | 3,097,017 | |||||
| Effect of foreign currency translation | 35,543 | - | |||||
| Net Change in Cash | 4,990,804 | 1,188,609 | |||||
| Cash, Beginning of Period | 1,710,318 | 521,709 | |||||
| Cash, End of Period | $ | 6,701,122 | $ | 1,710,318 | |||
| Cash Paid For: | |||||||
| Income Taxes | $ | - | $ | - | |||
| Interest | $ | 7,082 | $ | 9,805 | |||
| Non-cash transactions: | |||||||
| Notes payable issued for asset acquisitions | $ | 2,439,000 | $ | - | |||
