EX-99.2 3 onfo_ex992.htm EX-99.2 onfo_ex992.htm

EXHIBIT 99.2

 

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

The following unaudited pro forma combined financial data are presented to illustrate the effect the October 18, 2024 acquisition by Onfolio Holdings, Inc. (the “Company”), from Eastern Standard, LLC, substantially all of the Seller’s assets utilized in the operation of the business of digital marketing services, including integrated branding, and digital customer experiences, which will be known as “Eastern Standard” (the “Eastern Standard Acquisition” or the “Acquired Business”);

 

The following unaudited pro forma combined balance sheet data as of September 30, 2024 is presented as if the Eastern Standard Acquisition had occurred on September 30, 2024. The following unaudited pro forma combined statement of operations data for the nine months ended September 30, 2024 and the year ended December 31, 2023 is presented as if the Acquisitions occurred on January 1, 2023.

 

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 unaudited interim financial statements for the nine months ended September 30, 2024 (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, 2023, which were included in the Company’s Form 10K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission on April 24, 2024, (b) the historical unaudited consolidated quarterly financial statements and accompanying notes thereto of the Company for the nine months ended September 30, 2024, which were included in the Company’s Form 10-Q for the nine months ended September 30, 2024, as filed with the Securities and Exchange Commission on November 14, 2024 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 Report and the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, as filed with the Commission on November 14, 2024.

 

 
1

 

 

ONFOLIO HOLDINGS, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

AS OF SEPTEMBER 30, 2024

 

 

 

Consolidated

Historical

 

 

 

 

Estern

Standard

Pro Forma

 

 

Combined

Pro Forma

 

 

 

September 30,

2024

 

 

 Eastern

Standard

 

 

Adjustments

( See Notes)

 

 

September 30,

2024

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 $ 363,244

 

 

 $ 886,997

 

 

 

 (886,997 )(a)

 

 $ 363,244

 

Accounts receivable, net

 

 

 226,664

 

 

 

 508,295

 

 

 

 (152,724

)(c)

 

 

582,235

 

Unbilled accounts receivable

 

 

 

 

 

 

 245,175

 

 

 

 -

 

 

 

 245,175

 

Inventory

 

 

 55,330

 

 

 

-

 

 

 

-

 

 

 

 55,330

 

Prepaid expenses and other current assets

 

 

 155,305

 

 

 

 43,288

 

 

 

(43,288

)(c)

 

 

155,305

 

Total current assets

 

 

 800,543

 

 

 

 1,683,755

 

 

 

(1,083,009

 )

 

 

1,401,289

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed Assets, net

 

 

 -

 

 

 

 5,135

 

 

 

 -

 

 

 

 5,135

 

Intangible assets

 

 

 4,069,795

 

 

 

 874

 

 

 

 1,129,126 (d)

 

 

 5,199,795

 

Goodwill

 

 

 3,112,987

 

 

 

 

 

 

 

1,141,178

 (e)

 

 

4,254,165

 

Due from related party

 

 

 126,013

 

 

 

-

 

 

 

-

 

 

 

 126,013

 

Investment in unconsolidated joint ventures, cost method

 

 

 188,007

 

 

 

-

 

 

 

-

 

 

 

 188,007

 

Investment in unconsolidated joint ventures, equity method

 

 

 267,483

 

 

 

-

 

 

 

-

 

 

 

 267,483

 

Other assets

 

 

 10,323

 

 

 

-

 

 

 

-

 

 

 

 10,323

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 -

 

TOTAL ASSETS

 

 

 8,575,151

 

 

 

 1,689,764

 

 

1,187,295

 

 

 

 11,452,210

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and other current liabilities

 

 

 786,716

 

 

 

 239,405

 

 

 

 (239,405 )(c)

 

 

 786,716

 

Accrued compensation

 

 

 -

 

 

 

 97,890

 

 

 

 (97,890 )(c)

 

 

 -

 

Dividends payable

 

 

 87,248

 

 

 

-

 

 

 

-

 

 

 

 87,248

 

Notes Payable, current

 

 

 311,577

 

 

 

 

 

 

 

 1,250,000 (b)

 

 

 1,561,577

 

Contingent consideration

 

 

 1,929,000

 

 

 

-

 

 

 

-

 

 

 

 1,929,000

 

Deferred Revenue

 

 

 235,321

 

 

 

 477,059

 

 

 

-

 

 

 

 712,380

 

Total current liabilities

 

 

 3,349,862

 

 

 

 814,354

 

 

 

 912,705

 

 

 

 5,076,921

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes payable

 

 

 840,000

 

 

 

-

 

 

 

-

 

 

 

 840,000

 

Notes payable, related parties

 

 

 199,000

 

 

 

-

 

 

 

-

 

 

 

 199,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 4,388,862

 

 

 

 814,354

 

 

 

 912,705

 

 

 

 6,115,921

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net parent investment

 

 

 -

 

 

 

 875,410

 

 

 

 (875,410 )(c)

 

 

 -

 

Preferred stock

 

 

 118

 

 

 

 -

 

 

 

 16 (b)

 

 

 134

 

Common stock

 

 

 5,128

 

 

 

 -

 

 

 

 -

 

 

 

 5,128

 

Additional paid-in capital

 

 

 21,877,261

 

 

 

 -

 

 

 

 409,984 (b)

 

 

 22,287,245

 

Accumulated other comprehensive income

 

 

 105,617

 

 

 

-

 

 

 

-

 

 

 

 105,617

 

Retained earnings (accumulated deficit)

 

 

 (18,106,474 )

 

 

-

 

 

-

 

 

 

 (18,106,474 )

Total Onfolio Inc. stockholders equity

 

 

 3,881,650

 

 

 

 875,410

 

 

 

 (465,410 )

 

 

 4,291,650

 

Non-Controlling Interest

 

 

 304,639

 

 

 

 

 

 

 

 740,000 (b)

 

 

 1,044,639

 

Total Stockholders' Equity

 

 

 4,186,289

 

 

 

 875,410

 

 

 

 274,590

 

 

 

 5,336,289

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

 $ 8,575,151

 

 

 $ 1,689,764

 

 

 $ 1,187,295

 

 

 $ 11,452,210

 

 

 
2

 

 

ONFOLIO HOLDINGS, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024

 

 

 

Consolidated

 

 

 

 

 

Eastern

Standard

 

 

Combined

 

 

 

September 30,

2024

 

 

Eastern

Standard

 

 

Pro Forma

Adjustments

September 30,

2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 $ 5,325,273

 

 

 $ 3,453,126

 

 

 $ -

 

 

 $ 8,778,399

 

Cost of revenues

 

 

 2,139,831

 

 

 

 1,684,488

 

 

 

 -

 

 

 

 3,824,319

 

Gross profit

 

 

 3,185,442

 

 

 

 1,768,638

 

 

 

 -

 

 

 

 4,954,080

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

 4,316,089

 

 

 

 1,266,721

 

 

 

 255,375 (f)

 

 

 5,838,185

 

Professional Fees

 

 

 595,056

 

 

 

-

 

 

 

-

 

 

 

595,056

 

Acquisition costs

 

 

 122,266

 

 

 

-

 

 

 

-

 

 

 

122,266

 

Impairment of goodwill and intangible assets

 

 

 4,678

 

 

 

-

 

 

 

 -

 

 

 

 4,678

 

Total operating expenses

 

 

 5,038,089

 

 

 

 1,266,721

 

 

 

 255,375

 

 

 

6,560,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

 (1,852,647 )

 

 

 501,917

 

 

 

 (255,375 )

 

 

 (1,606,105 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Method Income

 

 

 (5,560 )

 

 

 -

 

 

 

 -

 

 

 

 (5,560 )

Dividend Income

 

 

 5,844

 

 

 

 -

 

 

 

 -

 

 

 

 5,844

 

Interest income (expense), net

 

 

 (60,564 )

 

 

 -

 

 

 

 (75,000 )(g)

 

 

 (135,564 )

Other income 

 

 

 2,934

 

 

 

 4,106

 

 

 

 -

 

 

 

 7,040

 

Total other income (expense)

 

 

 (57,346 )

 

 

 4,106

 

 

 

 (75,000 )

 

 

 (128,240 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

 (1,909,993 )

 

 

 506,023

 

 

 

 (330,375 )

 

 

 (1,734,345 )

Income tax benefit

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

Net income (loss)

 

 

 (1,909,993 )

 

 

 506,023

 

 

 

 (330,375 )

 

 

 (1,734,345 )

Net loss attributable to noncontrolling interest

 

 

 9,961

 

 

 

-

 

 

 

 (257,889 )(h)

 

 

 (247,928 )

Net loss attributable to Onfolio Holdings Inc.

 

 

 (1,900,032 )

 

 

 506,023

 

 

 

 (588,264 )

 

 

 (1,982,273 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends on Preferred stock

 

 

 (253,833 )

 

 

-

 

 

 

 (36,900 )(i)

 

 

 (290,733 )

Net income (loss) available to Common Shareholders

 

 $ (2,153,865 )

 

 $ 506,023

 

 

 $ (625,164 )

 

 $ (2,273,006 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 $ (0.42 )

 

 

 

 

 

 

 

 

 

 $ (0.44 )

Diluted

 

 $ (0.42 )

 

 

 

 

 

 

 

 

 

 $ (0.44 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing earnings/(loss) per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 5,114,767

 

 

 

 

 

 

 

 

 

 

 

 5,114,767

 

Diluted

 

 

 5,114,767

 

 

 

 

 

 

 

 

 

 

 

 5,114,767

 

 

 
3

 

 

ONFOLIO HOLDINGS, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2023

 

 

 

Consolidated

Historical

 

 

 

 

 

Eastern

Standard

Pro Forma

 

 

Combined

Pro Forma

 

 

 

December 31,

2023

 

 

Eastern

Standard

 

 

Adjustments

$

 

 

December 31,

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 $ 5,239,986

 

 

 $ 3,497,372

 

 

 $ -

 

 

 $ 8,737,358

 

Cost of revenues

 

 

 1,997,155

 

 

 

 1,807,629

 

 

 

 -

 

 

 

 3,804,784

 

Gross profit

 

 

 3,242,831

 

 

 

 1,689,743

 

 

 

 -

 

 

 

 4,932,574

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

 6,040,688

 

 

 

 1,714,135

 

 

 

 340,500 (f)

 

 

 8,095,323

 

Professional Fees

 

 

 1,160,410

 

 

 

 -

 

 

 

 -

 

 

 

 1,160,410

 

Acquisition costs

 

 

 3,952,433

 

 

 

 -

 

 

 

 -

 

 

 

 3,952,433

 

Impairment of goodwill and intangible assets

 

 

 326,899

 

 

 

 -

 

 

 

 -

 

 

 

 326,899

 

Total operating expenses

 

 

 11,480,430

 

 

 

 1,714,135

 

 

 

 340,500

 

 

 

 13,535,065

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

 (8,237,599 )

 

 

 (24,392 )

 

 

 (340,500 )

 

 

 (8,602,491 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Method Income

 

 

 13,190

 

 

 

 -

 

 

 

 -

 

 

 

 13,190

 

Dividend Income

 

 

 1,610

 

 

 

 -

 

 

 

 -

 

 

 

 1,610

 

Interest income (expense), net

 

 

 75,041

 

 

 

 7,475

 

 

 

 (100,000 )(g)

 

 

 (17,484 )

Other income

 

 

 2,937

 

 

 

 4,814

 

 

 

 -

 

 

 

 7,751

 

Total other income (expense)

 

 

 92,778

 

 

 

 12,289

 

 

 

 (100,000 )

 

 

 5,067

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

 (8,144,821 )

 

 

 (12,103 )

 

 

 (440,500 )

 

 

 (8,597,424 )

Income tax (provision) benefit

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

Net income (loss)

 

 

 (8,144,821 )

 

 

 (12,103 )

 

 

 (440,500 )

 

 

 (8,597,424 )

Net loss attributable to noncontrolling interest

 

 

 -

 

 

 

 -

 

 

 

 (132,089 )(h)

 

 

 (132,089 )

Net loss attributable to Onfolio Holdings Inc.

 

 

 (8,144,821 )

 

 

 (12,103 )

 

 

 (572,589 )

 

 

 (8,729,513 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends on Preferred stock

 

 

 (227,298 )

 

 

 -

 

 

 

 (49,200 )(i)

 

 

 (276,498 )

Net income (loss) available to Common Shareholders

 

 $ (8,372,119 )

 

 $ (12,103 )

 

 $ (621,789 )

 

 $ (9,006,011 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 $ (1.64 )

 

 

 

 

 

 

 

 

 

 $ (1.76 )

Diluted

 

 $ (1.64 )

 

 

 

 

 

 

 

 

 

 $ (1.76 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing earnings/(loss) per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 5,107,395

 

 

 

 

 

 

 

 

 

 

 

 5,107,395

 

Diluted

 

 

 5,107,395

 

 

 

 

 

 

 

 

 

 

 

 5,107,395

 

 

 
4

 

 

ONFOLIO HOLDINGS, INC.

 

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

1.

DESCRIPTION OF TRANSACTIONS

 

Acquisition of Eastern Standard

 

On September 20, 2024, Eastern Standard LLC (“Eastern Standard Delaware”), a Delaware limited liability company and Onfolio Holdings Inc.’s (the “Company”) majority owned subsidiary, entered into an Asset Purchase Agreement (“Asset Purchase Agreement”) with Eastern Standard, LLC (“Eastern Standard Pennsylvania”), a Pennsylvania limited liability company, Mark Gisi, James Keller and Vincent Giordano. Pursuant to the Asset Purchase Agreement, Eastern Standard Delaware will purchase from Eastern Standard Pennsylvania all of Eastern Standard Pennsylvania’s assets utilized in the operation of its business of providing digital marketing services, including integrated branding, and digital customer experiences (the “Acquired Business”).

 

Pursuant to the Asset Purchase Agreement, and subject to the terms and conditions contained therein, at the closing, Eastern Standard Pennsylvania agreed to sell to Eastern Standard Delaware the Acquired Business, all as more fully described in the Asset Purchase Agreement. The aggregate purchase price for the Acquired Business is $2,160,000. As of the closing, the Company owns 70% of Eastern Standard Delaware in exchange for $1,250,000 payable pursuant to two secured promissory notes which are guaranteed by the Company, and $410,000 of the Company’s Series A Preferred Shares. The entities comprising the Company’s special purpose vehicle funding program owns an aggregate of 20% of Eastern Standard Delaware in exchange for $500,000 payable in cash. Eastern Standard Pennsylvania owns a 10% roll-over equity interest in Eastern Standard Delaware.

 

The transaction closed on October 18, 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.

 

2.

BASIS OF PRESENTATION

 

The accompanying unaudited pro forma combined financial statements are based on the Company’s and the Acquired Businesses’ historical financial as adjusted to give effect to the pro forma adjustments necessary to reflect the Acquisitions and the Company’s new equity issuance to finance the acquisition. The unaudited pro forma combined statement of operations for the nine months ended September 30, 2024 and the year ended December 31, 2023, gives effect to the Acquired Business as if it had occurred on January 1, 2024 and 2023, respectively and the pro forma combined balance sheet as of September 30, 2024 gives effect to the Acquisition as if it had occurred on September 30, 2024.

 

3.

PRELIMINARY PURCHASE PRICE ALLOCATIONS

 

The preliminary purchase price for the Acquired Businesses have 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 Businesses 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 Acquisitions. 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.

 

 
5

 

 

Preliminary Purchase Price Allocation 

 

The acquisition of Eastern Standard 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

 

 $ 500,000

 

Promissory Note, net of discount

 

 

 1,250,000

 

Preferred Shares

 

 

 410,000

 

Roll-over equity

 

 

 240,000

 

Total preliminary purchase consideration

 

 

 2,400,000

 

 

 

 

 

 

Preliminary Purchase Price Allocation

 

 

 

 

Accounts receivable

 

 $

355,572

 

Unbilled receivables

 

 

 245,175

 

Fixed assets

 

 

 5,135

 

Website domains

 

 

 90,000

 

Customer relationships

 

 

 490,000

 

Trademarks and trade names

 

 

 530,000

 

Non-compete agreement

 

 

 20,000

 

Goodwill

 

 

1,141,177

 

Deferred revenues

 

 

 (477,059 )

 

 

 

 

 

Net assets acquired

 

 $ 2,400,000

 

 

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:

 

Remove historical cash of Eastern Standard

 

 

 (886,997 )

 

 

 

 

 

Net pro forma impact to cash

 

 $ (886,997 )

 

(b)

Other Consideration given for asset acquisitions consisting of:

 

Note payable bearing interest at 8% per annum with a maturity date of April 18, 2025

 

 $ 400,000

 

Note payable bearing interest at 8% per annum with a maturity date of October 18, 2026

 

 

 850,000

 

Roll-over equity

 

 

 240,000

 

Amount paid by SPV in exchange for equity interest

 

 

 500,000

 

Preferred shares

 

 

 410,000

 

Total other consideration given

 

 $ 2,400,000

 

 

(c)

Elimination of historical assets and liabilities not acquired as part Acquired Businesses

 

(d)

Estimated Fair Value of intangible assets acquired in acquisitions

 

(e)

Estimated Fair Value of goodwill acquired in business acquisitions

 

(f)

Estimated intangible assets amortization of acquired intangible assets.

 

(g)

Estimated interest from new promissory notes issued as consideration to the sellers of the Acquired Businesses.

 

(h)

Estimated dividends from new preferred shares issued as consideration to the sellers of the Acquired Businesses.

 

(i)

Estimated net loss attributable to the non-controlling interest issued as consideration to the sellers of the Acquired Businesses.

 

 

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