EXHIBIT 99.2
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial data are presented to illustrate the effect the December 31, 2023 acquisition by Onfolio Holdings, Inc. (the “Company”), from RevenueZen, LLC, (“RevenueZen”), substantially all of RevenueZen’s assets utilized in the operation of the RevenueZen business (the “Acquired Business”). RevenueZen works with B2B brands to grow their organic and referral traffic. In addition, they provide and consult on content marketing services to help convert that traffic into paying customers. Services range from Search Engine Optimization (‘SEO’) to Linkedin marketing, which will be known as “RevenueZen.”
The following unaudited pro forma combined balance sheet data as of September 30, 2023 is presented as if the Company’s acquisition of the Acquired Business (the “Acquisition”) had occurred on September 30, 2023. The following unaudited pro forma combined statement of operations data for the twelve months ended September 30, 2023 is presented as if the Acquisition occurred on October 1, 2022.
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 “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, 2022, which were included in the Company’s Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on April 12, 2023, (the “Annual Statement”), (b) the historical unaudited consolidated quarterly financial statements and accompanying notes thereto of the Company for the nine months ended September 30, 2023, which were included in the Company’s Form 10-Q for the nine months ended September 30, 2023, as filed with the Securities and Exchange Commission on November 14, 2023 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 Statement and the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, as filed with the Commission on November 14, 2023.
ONFOLIO HOLDINGS, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 2023
|
| Consolidated Historical September 30, |
|
| RevenueZen December 31, |
|
| RevenueZen Pro Forma Adjustments |
|
| Combined |
| ||||
|
| 2023 |
|
| 2023 |
|
| ( See Notes) |
|
| Pro Forma |
| ||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash and cash equivalents |
| $ | 3,373,178 |
|
| $ | 82,762 |
|
|
| (322,762 | ) |
| $ | 3,133,178 |
|
|
|
|
|
|
|
|
|
|
|
| (240,000 | )(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (82,762 | )(c) |
|
|
|
|
Accounts receivable, net |
|
| 97,522 |
|
|
| 8,982 |
|
|
| (8,982 | )(c) |
|
| 97,522 |
|
Inventory |
|
| 114,492 |
|
|
| - |
|
|
| - |
|
|
| 114,492 |
|
Prepaid expenses and other current assets |
|
| 121,557 |
|
|
| 6,669 |
|
|
| (6,669 | )(c) |
|
| 121,557 |
|
Total current assets |
|
| 3,706,749 |
|
|
| 98,413 |
|
|
| (338,413 | ) |
|
| 3,466,749 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets |
|
| 3,280,243 |
|
|
| - |
|
|
| 682,000 | (d) |
|
| 3,962,243 |
|
Goodwill |
|
| 1,165,636 |
|
|
| - |
|
|
| 825,634 | (e) |
|
| 1,991,270 |
|
Due from related party |
|
| 156,952 |
|
|
| - |
|
|
|
|
|
|
| 156,952 |
|
Note Receivable - related party |
|
| - |
|
|
| 20,209 |
|
|
| (20,209 | )(c) |
|
| - |
|
Investment in unconsolidated joint ventures, cost method |
|
| 154,007 |
|
|
| - |
|
| -(c) |
|
|
| 154,007 |
| |
Investment in unconsolidated joint ventures, equity method |
|
| 274,774 |
|
|
| - |
|
|
|
|
|
|
| 274,774 |
|
Other Assets |
|
| - |
|
|
| 76,650 |
|
|
| (76,650 | )(c) |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
TOTAL ASSETS |
|
| 8,738,361 |
|
|
| 195,272 |
|
|
| 1,072,362 |
|
|
| 10,005,995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and other current liabilities |
|
| 431,189 |
|
|
| 86,668 |
|
|
| (86,668 | )(c) |
|
| 431,189 |
|
Dividends payable |
|
| 49,341 |
|
|
| - |
|
|
|
|
|
|
| 49,341 |
|
Acquisition notes payable |
|
| 2,416,323 |
|
|
| - |
|
|
| 314,972 | (b) |
|
| 2,731,295 |
|
Notes Payable - related party |
|
| - |
|
|
| 32,156 |
|
|
| (32,156 | )(c) |
|
| - |
|
Contingent consideration |
|
| 60,000 |
|
|
| - |
|
|
| 227,000 | (b) |
|
| 287,000 |
|
Deferred Revenue |
|
| 228,960 |
|
|
| - |
|
|
| - |
|
|
| 228,960 |
|
Total current liabilities |
|
| 3,185,813 |
|
|
| 118,824 |
|
|
| 423,148 |
|
|
| 3,727,785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
| 3,185,813 |
|
|
| 118,824 |
|
|
| 423,148 |
|
|
| 3,727,785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Member's equity |
|
| - |
|
|
| 76,448 |
|
|
| (76,448 | )(c) |
|
| - |
|
Preferred stock |
|
| 70 |
|
|
| - |
|
|
| 17 | (b) |
|
| 87 |
|
Common stock |
|
| 5,110 |
|
|
| - |
|
|
| - |
|
|
| 5,110 |
|
Additional paid-in capital |
|
| 20,520,807 |
|
|
| - |
|
|
| 544,729 | (b) |
|
| 21,065,536 |
|
Accumulated other comprehensive income |
|
| 73,910 |
|
|
| - |
|
|
| - |
|
|
| 73,910 |
|
Retained earnings (accumulated deficit) |
|
| (15,047,349 | ) |
|
| - |
|
|
| - |
|
|
| (15,047,349 | ) |
Total stockholders' equity Onfolio Holdings, Inc. |
|
| 5,552,548 |
|
|
| 76,448 |
|
|
| 468,298 |
|
|
| 6,097,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NCI |
|
|
|
|
|
|
|
|
|
| 180,916 | (b) |
|
| 180,916 |
|
Total Equity |
|
| 5,552,548 |
|
|
| 76,448 |
|
|
| 649,214 |
|
|
| 6,278,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
| $ | 8,738,361 |
|
| $ | 195,272 |
|
|
| 1,072,362 |
|
| $ | 10,005,995 |
|
ONFOLIO HOLDINGS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2023
|
| Consolidated Historical for the 12 months ended September 30, 2023 |
|
| RevenueZen Historical Year ended December 31, 2023 |
|
| RevenueZen Pro Forma Adjustments |
|
| Pro Forma December 31, 2023 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenues |
| $ | 5,098,857 |
|
| $ | 1,414,383 |
|
| $ | - |
|
| $ | 6,513,240 |
|
Cost of revenues |
|
| 1,940,225 |
|
|
| 943,398 |
|
|
| - |
|
|
| 2,883,623 |
|
Gross profit |
|
| 3,158,632 |
|
|
| 470,985 |
|
|
| - |
|
|
| 3,629,617 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
| 6,192,071 |
|
|
| 588,723 |
|
|
| 122,000 | (g) |
|
| 6,902,794 |
|
Professional Fees |
|
| 991,219 |
|
|
| - |
|
|
| - |
|
|
| 991,219 |
|
Impairment of intangible assets |
|
| 3,952,516 |
|
|
| - |
|
|
| - |
|
|
| 3,952,516 |
|
Acquisition costs |
|
| 577,856 |
|
|
| - |
|
|
| - |
|
|
| 577,856 |
|
Total operating expenses |
|
| 11,713,662 |
|
|
| 588,723 |
|
|
| 122,000 |
|
|
| 12,424,385 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
| (8,555,030 | ) |
|
| (117,738 | ) |
|
| (122,000 | ) |
|
| (8,794,768 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Method Income |
|
| 23,297 |
|
|
| - |
|
|
| - |
|
|
| 23,297 |
|
Dividend Income |
|
| 2,511 |
|
|
| - |
|
|
| - |
|
|
| 2,511 |
|
Interest income (expense), net |
|
| 70,832 |
|
|
| (3,259 | ) |
|
| (79,657 | )(h) |
|
| (12,084 | ) |
Other income |
|
| 3,715 |
|
|
| - |
|
|
| - |
|
|
| 3,715 |
|
Impairment of investments |
|
| (108,045 | ) |
|
|
|
|
|
|
|
|
|
| (108,045 | ) |
Loss on sale of assets |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total other income (expense) |
|
| (7,690 | ) |
|
| (3,259 | ) |
|
| (79,657 | ) |
|
| (90,606 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
| (8,562,720 | ) |
|
| (120,997 | ) |
|
| (201,657 | ) |
|
| (8,885,374 | ) |
Income tax (provision) benefit |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Net income (loss) |
|
| (8,562,720 | ) |
|
| (120,997 | ) |
|
| (201,657 | ) |
|
| (8,885,374 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on Preferred stock |
|
| (263,545 | ) |
|
| - |
|
|
| (51,000 | ) |
|
| (314,545 | ) |
Net income (loss) attributable to non-controlling interest |
|
|
|
|
|
|
|
|
|
| 29,160 |
|
|
| 29,160 |
|
Net income (loss) available to Common Shareholders |
| $ | (8,826,265 | ) |
| $ | (120,997 | ) |
| $ | (223,497 | ) |
| $ | (9,170,759 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | (1.73 | ) |
|
|
|
|
|
|
|
|
| $ | (1.79 | ) |
Diluted |
| $ | (1.73 | ) |
|
|
|
|
|
|
|
|
| $ | (1.79 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing earnings/(loss) per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
| 5,110,195 |
|
|
|
|
|
|
|
|
|
|
| 5,110,195 |
|
Diluted |
|
| 5,110,195 |
|
|
|
|
|
|
|
|
|
|
| 5,110,195 |
|
ONFOLIO HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
1. | DESCRIPTION OF TRANSACTION |
Acquisition of RevenueZen
On December 31, 2023, RevenueZen and the Company and RevenueZen LLC, a Delaware limited liability company ("RevenueZen Delaware") a subsidiary of the Company, entered into and closed an asset purchase agreement (the "Asset Purchase Agreement"), for the purchase by the Company of of the Acquired Business.
Pursuant to the Asset Purchase Agreement, and subject to the terms and conditions contained therein, at the closing, RevenueZen agreed to sell to the Company the Acquired Business, all as more fully described in the Asset Purchase Agreement. The aggregate purchase price for the Acquired Business was $1,332,000, consisting of $240,000 in cash at closing, $425,000 in Company Series A Preferred Shares, a $440,000 11% interest only secured promissory note made by RevenueZen Delaware due December 31, 2025 (the “Promissory Note”), and additional earn-out payments totalling $227,000 could be paid to RevenueZen pursuant to the earn-out formula described in the Asset Purchase Agreement. In addition, five founders of the RevenueZen received a total of a 12% equity interest in RevenueZen Delaware, and they will serve in leadership roles with the RevenueZen Delaware team. Also, certain of the founders received a total of 270,000 non-qualified stock options to purchase Company common shares at $0.51 per share for a period of 10 years pursuant to the Company’s 2020 Equity Compensation Plan.
The transaction closed on January 4, 2024, when consideration was transferred by the Company and control was obtained by the Company 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 Business’ historical financials as adjusted to give effect to the pro forma adjustments necessary to reflect the Acquisition. The unaudited pro forma combined statement of operations for the twelve months ended September 30, 2023, gives effect to the Acquired Business’ as if it had occurred on January 1, 2023 and the pro forma combined balance sheet as of December 31, 2023 gives effect to the Acquisition as if it had occurred on December 31, 2023. The historical financials for the twelve months ended September 30, 2023 of the Company were derived as follows:
|
| Historical Nine Months Ended September 30, 2023 |
|
| Plus: Historical Year Ended December 31, 2022 |
|
| Less: Historical Nine Months ended September 30, 2022 |
|
| Total Twelve Months Ended September 30, 2023 |
| ||||
|
|
|
|
| ||||||||||||
Revenues |
| $ | 3,975,088 |
|
| $ | 2,219,815 |
|
| $ | 1,096,046 |
|
| $ | 5,098,857 |
|
Cost of revenues |
|
| 1,568,589 |
|
|
| 1,021,362 |
|
|
| 649,726 |
|
|
| 1,940,225 |
|
Gross profit |
|
| 2,406,499 |
|
|
| 1,198,453 |
|
|
| 446,320 |
|
|
| 3,158,632 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
| 4,724,357 |
|
|
| 4,271,865 |
|
|
| 2,804,151 |
|
|
| 6,192,071 |
|
Professional Fees |
|
| 843,910 |
|
|
| 509,941 |
|
|
| 362,632 |
|
|
| 991,219 |
|
Impairment of intangible assets |
|
| 3,952,516 |
|
|
| - |
|
|
| - |
|
|
| 3,952,516 |
|
Acquisition costs |
|
| 285,532 |
|
|
| 527,792 |
|
|
| 235,468 |
|
|
| 577,856 |
|
Total operating expenses |
|
| 9,806,315 |
|
|
| 5,309,598 |
|
|
| 3,402,251 |
|
|
| 11,713,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
| (7,399,816 | ) |
|
| (4,111,145 | ) |
|
| (2,955,931 | ) |
|
| (8,555,030 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Method Income |
|
| 14,921 |
|
|
| 34,432 |
|
|
| 26,056 |
|
|
| 23,297 |
|
Dividend Income |
|
| 1,610 |
|
|
| 3,193 |
|
|
| 2,292 |
|
|
| 2,511 |
|
Interest income (expense), net |
|
| 68,989 |
|
|
| (2,152 | ) |
|
| (3,995 | ) |
|
| 70,832 |
|
Other income |
|
| 2,937 |
|
|
| 13,223 |
|
|
| 12,445 |
|
|
| 3,715 |
|
Loss on sale of assets |
|
| - |
|
|
| (34,306 | ) |
|
| (34,306 | ) |
|
| - |
|
Impairment of investments |
|
| - |
|
|
| (137,602 | ) |
|
| (29,557 | ) |
|
| (108,045 | ) |
Total other income (expense) |
|
| 88,457 |
|
|
| (123,212 | ) |
|
| (123,212 | ) |
|
| (7,690 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
| (7,311,359 | ) |
|
| (4,234,357 | ) |
|
| (2,982,996 | ) |
|
| (8,562,720 | ) |
Income tax (provision) benefit |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Net income (loss) |
|
| (7,311,359 | ) |
|
| (4,234,357 | ) |
|
| (2,982,996 | ) |
|
| (8,562,720 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on Preferred stock |
|
| (155,500 | ) |
|
| (195,145 | ) |
|
| (137,305 | ) |
|
| (263,545 | ) |
Net income (loss) attributable to non-controlling interest |
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
Net income (loss) available to Common Shareholders |
| $ | (8,826,265 | ) |
| $ | (4,429,502 | ) |
| $ | (3,120,301 | ) |
| $ | (8,826,265 | ) |
3. | PRELIMINARY PURCHASE PRICE ALLOCATIONS |
The preliminary purchase price for the Acquired Business has 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 Business 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 Acquisition. 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.
Preliminary Purchase Price Allocation
The Acquisition 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: |
|
|
| |
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| |
Cash |
| $ | 240,000 |
|
Promissory Note, net of discount |
|
| 440,000 |
|
Common stock options |
|
| 119,745 |
|
Preferred Shares |
|
| 425,000 |
|
Contingent Consideration, Earn-out provision |
|
| 227,000 |
|
Total preliminary purchase consideration |
|
| 1,326,718 |
|
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|
|
|
|
Preliminary Purchase Price Allocation |
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|
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Website domains |
| $ | 150,000 |
|
Customer relationships |
|
| 452,000 |
|
Trademarks and trade names |
|
| 75,000 |
|
Non-compete agreement |
|
| 5,000 |
|
Goodwill |
|
| 825,634 |
|
Net assets acquired |
| $ | 1,507,634 |
|
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: |
Cash paid to sellers of RevenueZen |
| $ | (240,000 | ) |
Net pro forma impact to cash |
| $ | (240,000 | ) |
(b) | Other consideration given for asset acquisitions consisting of: |
Note payable bearing interest at 11% per annum with a maturity date of Dec 31, 2025 |
| $ | 440,000 |
|
Discount on note payable |
|
| (125,028 | ) |
Common stock purchase options, exercise price of $0.51, term of 10 years, vesting immediately |
|
| 119,746 |
|
Earn-out provision to be earned pursuant to the RevenueZen purchase agreement |
|
| 227,000 |
|
Preferred shares |
|
| 425,000 |
|
Total other consideration given |
| $ | 1,326,718 |
|
(c) | Elimination of historical assets and liabilities not acquired.. |
(d) | Estimated Fair Value of intangible assets acquired . |
(e) | Estimated Fair Value of goodwill acquired . |
(g) | Estimated intangible assets amortization of acquired intangible assets. |
(h) | Estimated interest from new promissory notes issued as consideration to the sellers of the Acquired Business. |
(i) | Estimated dividends from new preferred shares issued as consideration to the sellers of the Acquired Business. |
(j) | Estimated net loss attributable to the non-controlling interest issued as consideration to the sellers of the Acquired Business. |