Onfolio (ONFO) - 2024 Q4 - Annual Report

Financial Performance - In 2024, Onfolio Holdings Inc. achieved a revenue increase of 50% year-over-year, reaching $7.8 million, primarily due to the acquisition of three new businesses[274]. - The gross profit margin slightly declined to 58% in 2024 from 62% in 2023, attributed to new acquisitions with lower margins[275]. - Operating loss significantly improved from $9.2 million to $2.5 million, driven by profitable acquisitions and disciplined expense management[275]. - In Q4 2024, Onfolio recorded a positive net income of $136,000, marking a crucial step towards sustained profitability[276]. - The Company reported a net loss of $1,773,942 for the year ended December 31, 2024, a significant improvement compared to a net loss of $9,150,066 in 2023[303]. - Total revenue increased by $2,622,091, or 50%, to $7,862,077 for the year ended December 31, 2024, driven by acquisitions including RevenueZen, DDS Rank, and Eastern Standard[303]. - Cost of revenue increased by $1,320,045, or 66%, to $3,317,200, with gross profit margins decreasing to 57% from 62%[304]. - B2B revenue surged by $2,996,664, or 218%, primarily due to the RevenueZen acquisition, while B2C revenue decreased by $374,573, or 10%[315][319]. - Total other income rose to $733,906 in 2024 from $92,778 in 2023, driven by changes in fair value related to the RevenueZen acquisition[310]. - Net cash used in operating activities decreased to $1,168,363 in 2024 from $2,751,838 in 2023, attributed to increased revenues and reduced general and administrative costs[323]. Acquisitions and Investments - The company acquired three new businesses in 2024, contributing a total of $6 million in revenue, with Eastern Standard being the largest acquisition at $4 million in revenue[279][281]. - The acquisition of Eastern Standard was completed for $2.16 million, with Onfolio holding a 70% ownership stake[294]. - The company holds a 35.8% interest in Onfolio JV IV, LLC, which focuses on acquiring and operating online businesses for advertising revenue[330]. - The company has entered into two asset purchase agreements with contingent earn-out payments: up to $60,000 for BWPS Business Acquisition and $680,662 for RevenueZen Acquisition, both contingent on performance criteria[340]. - The company has not made any earn-out payments as of December 31, 2024, for the contingent payments related to the acquisitions[340]. Capital and Financing - Series A preferred shares were quoted on the OTCQB on October 30, 2024, allowing the company to raise additional capital and reduce reliance on the OA SPV Capital Model[289]. - The Company raised $600,000 through a private offering of Series A preferred stock by December 31, 2023, and an additional $693,000 thereafter[321]. - The OA SPV Capital Model was launched in March 2024, enabling accredited retail investors to co-invest in acquisitions, facilitating the DDSRank and Eastern Standard acquisitions[285]. Operational Efficiency - General and Administrative expenses decreased by $263,355, or 4%, mainly due to reduced advertising and marketing costs[306]. - The Company incurred an impairment loss of $121,000 in 2024, a significant reduction from total impairment losses of $5,016,764 in 2023[309]. - Cash provided by investing activities was $451,000 in 2024, compared to cash used of $850,000 in 2023, primarily from the sale of WP Folio subsidiary assets[325]. Revenue Recognition and Accounting Policies - Revenue is primarily generated from website management, digital services, advertising, content placement, and product sales, with revenue recognized as services are provided or products are shipped[334]. - The company receives management fees of 10% and 20% from OA SPV and OA SPV 2, respectively, based on cash distributions, which are accounted for as revenue contracts[332]. - The company recognizes revenue from online course subscriptions on a deferred basis until performance obligations are satisfied[334]. - The company accounts for its investments in joint ventures under either the cost or equity method, depending on ownership interest, and does not classify them as variable interest entities[331]. - The company reviews long-lived assets for impairment at least annually, comparing carrying amounts to expected undiscounted cash flows[338]. - The company amortizes acquired definite-lived intangible assets over their estimated useful lives, while indefinite-lived assets are subject to annual impairment tests[335]. - No off-balance sheet arrangements are reported that could materially affect the company's financial condition[339]. Future Outlook - The company expects to achieve positive free cash flow in the near term and plans to continue pursuing fundraising and acquisition activities to accelerate growth[290]. - Onfolio aims to focus on finding profitable businesses, acquiring them, and improving operations to drive long-term value creation in 2025[291].