0001654954-22-017041.txt : 20221229 0001654954-22-017041.hdr.sgml : 20221229 20221229130107 ACCESSION NUMBER: 0001654954-22-017041 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 19 CONFORMED PERIOD OF REPORT: 20221013 ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20221229 DATE AS OF CHANGE: 20221229 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Onfolio Holdings, Inc CENTRAL INDEX KEY: 0001825452 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-41466 FILM NUMBER: 221497906 BUSINESS ADDRESS: STREET 1: 1007 NORTH ORANGE STREET 4TH FLOOR CITY: WILMINGTON STATE: DE ZIP: 19801 BUSINESS PHONE: (682) 990-6920 MAIL ADDRESS: STREET 1: 1007 NORTH ORANGE STREET 4TH FLOOR CITY: WILMINGTON STATE: DE ZIP: 19801 FORMER COMPANY: FORMER CONFORMED NAME: Onfolio Holdings Inc DATE OF NAME CHANGE: 20200923 FORMER COMPANY: FORMER CONFORMED NAME: Onfolio Holdings, Inc. DATE OF NAME CHANGE: 20200921 8-K/A 1 onfolio_8k.htm FORM 8-K/A onfolio_8k.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K/A

(Amendment No. 1)

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): October 13, 2022

 

ONFOLIO HOLDINGS INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-41466

 

37-1978697

(State or other jurisdiction of

 

(Commission

 

(I.R.S. Employer

incorporation or organization)

 

File Number)

 

Identification Number)

 

1007 North Orange Street, 4th Floor, Wilmington, Delaware

 

19801

(Address of principal executive offices)

 

(Zip Code)

 

 

 

 

Registrant’s telephone number, including area code (682) 990-6920

 

________________________________________________________

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

ONFO

Nasdaq Capital Market

Warrants To Purchase Common Stock

ONFOW

Nasdaq Capital Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 

 

Explanatory Note

 

On October 19, 2022, Onfolio Holdings, Inc. (the “Company”) filed with the Securities and Exchange Commission a Current Report on Form 8-K (the “Original Form 8-K”) disclosing, among other things, that: (i) on October 13, 2022 it had completed the previously announced acquisition of all of the issued share capital of SEO Butler Limited; and (ii) on October 14, 2022 it had completed the previously announced acquisition of substantially all the proofreading business assets of BCP Media, Inc.

 

This Current Report on Form 8-K/A amends and supplements the Original Form 8-K to provide the disclosures required by Item 9.01 of Form 8-K, which were not previously filed with the Original Form 8-K, including the required financial statements of SEO Butler Limited and BCP Media, Inc. and the required pro forma financial statements. Except as otherwise provided herein, the other disclosures made in the Original Form 8-K remain unchanged.

 

 
2

 

 

Item 9.01 Financial Statements and Exhibits.

 

(a) Financial statements of businesses acquired.

 

The (i) Audited Carve Out Financial Statements of SEO Butler Limited for the years ended November 30, 2021 and 2020; and (ii) Unaudited Carve Out Financial Statements of SEO Butler Limited for the Six Months ended May 31, 2022 and 2021 are attached hereto as Exhibit 99.1 and incorporated herein by reference.

 

The (i) Audited Financial Statements of BCP Media, Inc. for the years ended December 31, 2021 and 2020; and (ii) Unaudited Financial Statements of BCP Media, Inc. for the Six Months ended June 30, 2022 and 2021 are attached hereto as Exhibit 99.2 and incorporated herein by reference.

 

(b) Pro forma financial information.

 

The unaudited pro forma financial statements and explanatory notes relating to the Company’s acquisitions of SEO Butler Limited and BCP Media, Inc. are attached hereto as Exhibit 99.3 and incorporated herein by reference.

 

(d) Exhibits.

 

Exhibit No.

 

Description

 

 

 

99.1

 

Financial statements of SEO Butler Limited

99.2

 

Financial statements of BCP Media, Inc.

99.3

 

Pro forma financial information

104

 

Cover Page Interactive Data File (formatted as Inline XBRL)

 

 
3

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

ONFOLIO HOLDINGS INC.

 

 

 

 

 

Date: December 29, 2022

By:

/s/ Dominic Wells

 

 

 

Dominic Wells,

 

 

 

Chief Executive Officer

 

 

 
4

 

EX-99.1 2 onfolio_ex991.htm EX-99.1 onfolio_ex991.htm

EXHIBIT 99.1

 

SEO Butler Limited (Formerly i2W Ltd.)

 

 

 

Table of Contents

 

 

 

 

 

 

 

 

Page

 

Carve Out Financial Statements for the Six Months May 31, 2022 and 2021:

 

 

 

 

 

 

 

Unaudited Carve-Out Balance Sheets as of May 31, 2022 and November 30, 2021

 

2

 

 

 

 

 

Unaudited Carve-Out Statements of Comprehensive Income for the six months ended May 31, 2022 and 2021

 

3

 

 

 

 

 

Unaudited Carve-Out Statement of Net Parent Investment for the six months ended May 31, 2022 and 2021

 

4

 

 

 

 

 

Unaudited Carve-Out Statements of Cash Flows for the six months ended May 31, 2022 and 2021

 

5

 

 

 

 

 

Notes to Unaudited Carve-Out Financial Statements

 

6-9

 

 

 

 

 

Carve Out Financial Statements for the Years ended November 30, 2021 and 2020:

 

 

 

 

 

 

 

Independent Auditor’s Report

 

10

 

 

 

 

 

Balance Sheets

 

11

 

 

 

 

 

Statements of Operations

 

12

 

 

 

 

 

Statements of Stockholders' Deficit

 

13

 

 

 

 

 

Statements of Cash Flows

 

14

 

 

 

 

 

Notes to Financial Statements

 

15-19

 

 

 

 

 

SEO BUTLER LIMITED

(FORMERLY i2W LTD)

CARVE-OUT BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

 

May 31,

2022

 

 

November 30,

2021

 

 

 

 

 

 

ASSETS

 

Current assets:

 

 

 

 

 

 

Cash

 

$ 87,221

 

 

$ 68,319

 

Accounts receivable

 

 

-

 

 

 

63

 

Total current assets

 

 

87,223

 

 

 

68,382

 

 

 

 

 

 

 

 

 

 

Fixed assets, net

 

 

-

 

 

 

-

 

Total assets

 

$ 87,223

 

 

$ 68,382

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$ -

 

 

$ 7,049

 

Accrued expenses and other current liabilities

 

 

240

 

 

 

27,259

 

Total current liabilities

 

 

240

 

 

 

34,308

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

240

 

 

 

34,308

 

 

 

 

 

 

 

 

 

 

Invested equity:

 

 

 

 

 

 

 

 

Net parent investment

 

 

254,803

 

 

 

196,457

 

Accumulated other comprehensive loss

 

 

(167,822 )

 

 

(162,383 )

Total invested equity

 

 

86,981

 

 

 

34,074

 

 

 

 

 

 

 

 

 

 

Total liabilities and invested equity

 

$ 87,222

 

 

$ 68,382

 

 

 

 

 

 

 

 

 

 

See the accompanying notes to these unaudited carve-out financial statements

 

 
Page 2

 

 

SEO BUTLER LIMITED

(FORMERLY i2W LTD)

CARVE-OUT STATEMENTS OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDING MAY 31, 2022 AND 2021

(Unaudited)

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

Sales

 

$ 332,527

 

 

$ 408,072

 

Cost of sales

 

 

210,573

 

 

 

189,112

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

121,954

 

 

 

218,960

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

51,773

 

 

 

72,520

 

Total operating expenses

 

 

51,773

 

 

 

72,520

 

 

 

 

 

 

 

 

 

 

Net income from operations

 

 

70,181

 

 

 

146,440

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSES):

 

 

 

 

 

 

 

 

Interest Income

 

 

3

 

 

 

-

 

Total other income (expense)

 

 

3

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net income before income taxes

 

 

70,184

 

 

 

146,440

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

 

70,184

 

 

 

146,440

 

OTHER COMPREHENSIVE INCOME (LOSS)

 

 

 

 

 

 

 

 

Unrealized foreign currency gain (loss), net of tax

 

 

(5,439 )

 

 

2,931

 

COMPREHENSIVE INCOME (LOSS)

 

$ 64,745

 

 

$ 149,371

 

 

 

 

 

 

 

 

 

 

See the accompanying notes to these unaudited carve-out financial statements

 

 
Page 3

 

 

SEO BUTLER LIMITED

(FORMERLY i2W LTD)

STATEMENTS OF CHANGES IN NET PARENT INVESTMENT

FOR THE SIX MONTHS ENDING MAY 31, 2022 AND 2021

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Net parent investment

 

 

Other Comprehensive Income

 

 

Total Net

Parent

Investment

 

Balance, November 30, 2020

 

$ 170,846

 

 

$ (107,039 )

 

$ 63,807

 

Invested equity returned to SEO Butler

 

 

(120,829 )

 

 

-

 

 

 

(120,829 )

Comprehensive income (loss)

 

 

146,440

 

 

 

2,931

 

 

 

149,371

 

Balance, May 31, 2021

 

$ 196,457

 

 

$ (104,108 )

 

$ 92,349

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, November 30, 2021

 

$ 196,457

 

 

$ (162,383 )

 

$ 34,074

 

Invested equity returned to SEO Butler

 

 

(11,838 )

 

 

-

 

 

 

(11,838 )

Comprehensive income (loss)

 

 

70,184

 

 

 

(5,439 )

 

 

64,745

 

Balance, May 31, 2022

 

$ 254,803

 

 

$ (167,822 )

 

$ 86,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See the accompanying notes to these unaudited carve out financial statements

 

 
Page 4

 

 

SEO BUTLER LIMITED

(FORMERLY i2W LTD)

STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDING MAY 31, 2022 AND 2021

(Unaudited)

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$ 70,184

 

 

$ 146,440

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation expense

 

 

-

 

 

 

7,073

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

63

 

 

 

(63 )

Prepaids

 

 

-

 

 

 

6,821

 

Accounts payable and other accrued expenses

 

 

(34,056 )

 

 

(11,602 )

Net cash provided by operating activities

 

 

186,569

 

 

 

268,7721

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of fixed assets

 

 

-

 

 

 

-

 

Net cash used in investing activities

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Net parent investment returned to SEO Butler

 

 

(11,838 )

 

 

(120,829 )

Net cash provided by (used in) financing activities

 

 

(11,838 )

 

 

(120,829 )

 

 

 

 

 

 

 

 

 

Foreign currency effect on cash

 

 

(5,451 )

 

 

(55,377 )

 

 

 

 

 

 

 

 

 

Net change in cash

 

 

(18,902 )

 

 

(27,537 )

 

 

 

 

 

 

 

 

 

Cash at beginning of period

 

 

68,319

 

 

 

95,856

 

 

 

 

 

 

 

 

 

 

Cash at end of period

 

$ 87,221

 

 

$ 68,319

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$ -

 

 

$ -

 

Cash paid for taxes

 

$ 28,255

 

 

$ 5,089

 

 

 

 

 

 

 

 

 

 

See the accompanying notes to these unaudited financial statements

 

 
Page 5

 

 

SEO BUTLER LIMITED

(FORMERLY i2W Ltd.)

NOTES TO CARVE OUT FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

 

Nature of Operations

 

SEO BUTLER LIMITED (which may be referred to as the “Company”, “we,” “us,” or “our”) is a Limited Liability Company organized under the laws of England and Whales as of November 19, 2014 as i2W LTD. On March 1, 2021, the Company changed its name to SEO Butler LTD. Prior to December 2, 2021, the company was operated a sole proprietorship. The Company provides online resources for writing online content that best utilizes Search Engine Optimization (“SEO”) through its website www.seobutler.com.

 

Basis of Presentation

 

The SEO Butler Business (the “SEO Business”) has not historically constituted a separate legal group and stand-alone financial statements have not previously been prepared for the Business. The SEO Business represents the online writing resources business of the Company. The carve-out financial statements reflect allocations of direct and indirect expenses related to certain support functions that are provided on a centralized basis by the Company. These expenses have been allocated to the SEO Business on the basis of direct usage when identifiable, with others allocated based on relevant data criteria, such as the SEO Business percentage share of revenue, cost of sales or gross margin percentage of the Company.

 

The accompanying carve-out financial statements present the historical financial position, results of operations and changes in comprehensive income, changes in net parent investment and cash flows of the Business as it was historically managed and are presented in accordance with accounting principles generally accepted in the United States. In the opinion of management, all adjustments considered necessary for the fair presentation of the unaudited financial statements for the years presented have been included.

 

These financial statements have been prepared on a stand-alone basis derived from the financial statements and related accounting records of the Company. The financial information in these financial statements does not include all the expenses that would have been incurred had the SEO Business operated as a separate stand-alone entity and accordingly, may not reflect results of operations, financial position and cash flows had the SEO business been a stand-alone company during the fiscal six months ended May 31, 2022 and 2021. It is not practicable to estimate the differences between the costs allocated by the Company and those that would have been incurred had the SEO Business been a stand-alone company during the periods presented.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America ("US GAAP"). In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The accompanying unaudited financial statements do not include all the information and notes required by GAAP for complete financial statements.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results could materially differ from these estimates. It is reasonably possible that changes in estimates will occur in the near term.

 

Significant estimates inherent in the preparation of the accompanying financial statements include revenue recognition and contingencies.

 

 
Page 6

 

 

Risks and Uncertainties

 

The Company's business and operations are sensitive to general business and economic conditions in the United States and other countries that the Company operates in. A host of factors beyond the Company's control could cause fluctuations in these conditions. Adverse conditions may include recession, downturn or otherwise, local competition or changes in consumer taste. These adverse conditions could affect the Company's financial condition and the results of its operations.

 

Concentration of Credit Risk

 

The Company maintains its cash with major financial institutions located in Great Britain, which it believes to be credit worthy. The Financial Services Compensation Scheme insures balances up to £85,000. At times, the Company may maintain balances in excess of the federally insured limits.

 

Cash and Cash Equivalents

 

The Company considers short-term, highly liquid investment with original maturities of three months or less at the time of purchase to be cash equivalents. Cash consists of funds held in the Company’s checking account. As of May 31, 2022 the Company had $87,221 of cash on hand.

 

Property and Equipment

 

Property and equipment is recorded at cost and depreciated over its useful lives using the straigh0tline depreciation method.

 

Fair Value Measurements

 

Generally accepted accounting principles define fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and such principles also establish a fair value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority):

 

 

·

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

 

 

 

 

·

Level 2 – Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means.

 

 

 

 

·

Level 3 – Prices or valuation techniques requiring inputs that are both significant to the fair value measurement and unobservable.

 

The Company has no assets or liabilities valued using level 1, level 2, or level 3 inputs as of May 31, 2022.

 

Foreign Currency Translation and Transaction Gains (Losses)

 

The Company maintains its accounting records in pounds U.K. Pound Sterling, which is the Company’s functional currency. Assets and liabilities are translated into U.S. dollars at exchange rates at the balance sheet date, equity accounts are translated at historical exchange rate and revenues and expenses are translated by using the average exchange rates for the period. Translation adjustments are reported as a separate component of other comprehensive income (loss) in the consolidated statements of operations and comprehensive loss. Foreign currency denominated transactions are translated at exchange rates approximating those in effect at the transaction dates.

 

 
Page 7

 

 

Income Taxes

 

The provision for income taxes is determined using the asset and liability approach considering guidance related to uncertain tax positions. Tax laws require items to be included in tax filings at different times than the items are reflected in the financial statements. A current liability is recognized for the estimated taxes payable for the current year. Deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. Deferred taxes are initially recognized at enacted tax rates and are adjusted for any enacted changes in tax rates and tax laws. Subsequent changes to deferred taxes originally recognized in equity are recognized in income. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

 

The income tax effects from an uncertain tax position are recognized when it is more likely than not that the position will be sustained based on its technical merits and consideration of the tax authorities widely understood administrative practices and precedents. Recognized income tax positions are measured at the largest amount that has a greater than 50% likelihood of being realized upon settlement. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to uncertain tax positions in the provision for “provision for income taxes” on the Carve out Statements of Comprehensive Income.

 

Revenue Recognition;

 

The Company recognizes revenue in accordance with ASC 606 when it has satisfied the performance obligations under an arrangement with the customer reflecting the terms and conditions under which products or services will be provided, the fee is fixed or determinable, and collection of any related receivable is probable. ASC Topic 606, “Revenue from Contracts with Customers” establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: 1) identify the contract with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to performance obligations in the contract; and 5) recognize revenue as the performance obligation is satisfied.

 

The Company’s sole performance obligation under its contracts with customers is to provide writing content services to the customers. The revenue under these contracts is recognized over time as services are provided to the customer. There is no significant financing component to the Company’s contracts with customers.

 

Advertising

 

The Company expenses advertising costs as they are incurred.

 

Recent Accounting Pronouncements

 

The Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02). Under ASU No. 2016-2, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU No. 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, ASU No. 2016-02 is effective for annual reporting periods beginning after December 15, 2021, including interim reporting periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on the Company’s financial statements.

 

 
Page 8

 

 

This ASU was amended by ASU 2020-05 and is effective for annual periods beginning after December 15, 2021. On July 30, 2018, the FASB issued ASU 2018-11, Leases (Topic 842) – Targeted Improvements, which provides an optional transition method of applying the new leases standard at the adoption date by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Additionally, only incremental direct leasing costs may be capitalized under the new guidance. Any indirect incremental leasing costs must be expensed as incurred. The Company does not expect the adoption of ASU 2016-02 and related amendments to have a material impact on its financial statements.

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses. The main objective of this guidance is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity. To achieve this, the amendments in this guidance replace the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Specifically, the amendments in this guidance require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. This guidance is effective for fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact on its financial statements and related disclosures.

 

NOTE 3 – COMMITMENTS AND CONTINGENCIES

 

The Company, from time to time, may be involved with lawsuits arising in the ordinary course of business. In the opinion of the Company's management, any liability resulting from such litigation would not be material in relation to the Company's consolidated financial position, results of operations and cash flows. There is no pending or threatened litigation.

 

NOTE 4 – SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through December 29, 2022, the date the financial statements were available to be issued. Based on this evaluation, no additional material events were identified which require adjustment or disclosure in the financial statements except as disclosed below.

 

On October 6, 2022, the Company entered into a Share Purchase Agreement (“Share Purchase Agreement”) with Onfolio Holdings, Inc., a company incorporated and registered in the state of Delaware (“Buyer”), and Jonathan Kiekbusch, Ezekiel Daldy, and Lyndsay Kiekbusch, shareholders of the Company (collectively, the “Guarantors” or the “Sellers”), for the purchase of all of the issued share capital of SEO Butler Limited (“Sale Shares”). The Guarantors have agreed to guarantee to the Company the due and punctual performance, observance and discharge by the Seller of all the Guaranteed Obligations (as defined in the Share Purchase Agreement) if and when they become performable or due under the Share Purchase Agreement.

 

Pursuant to the Share Purchase Agreement, and on the terms and subject to the conditions contained therein, at the closing, the Buyer purchased the Sale Shares from the Sellers, all as more fully described in the Share Purchase Agreement. The aggregate purchase price paid by the Company was $950,000. The transaction closed on October 13, 2022 and will be accounted for as a business combination under ASC 805.

 

 
Page 9

 

 

Report of Independent Registered Public Accounting Firm

 

To the shareholders and the board of directors of SEO Butler Limited

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of SEO Butler Limited as of November 30, 2021 and 2020, the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 

/S/ BF Borgers CPA PC

BF Borgers CPA PC (PCAOB ID 5041)

 

We have served as the Company’s auditor since 2022

Lakewood, CO

December 29, 2022

 

 
Page 10

 

 

SEO BUTLER LIMITED

 

(FORMERLY i2W LTD)

 

CARVE-OUT BALANCE SHEETS

 

AS OF NOVMBER 30, 2021 AND 2020

 

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

ASSETS

 

Current assets:

 

 

 

 

 

 

Cash

 

$ 68,319

 

 

$ 95,856

 

Accounts receivable

 

 

63

 

 

 

-

 

Prepaids

 

 

-

 

 

 

6,407

 

Total current assets

 

 

68,382

 

 

 

102,263

 

 

 

 

 

 

 

 

 

 

Fixed assets, net

 

 

-

 

 

 

7,073

 

Total assets

 

$ 68,382

 

 

$ 109,336

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$ 7,049

 

 

$ 366

 

Accrued expenses and other current liabilities

 

 

27,259

 

 

 

45,163

 

Total current liabilities

 

 

34,308

 

 

 

45,529

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

34,308

 

 

 

45,529

 

 

 

 

 

 

 

 

 

 

Invested equity:

 

 

 

 

 

 

 

 

Net parent investment

 

 

196,457

 

 

 

170,846

 

Accumulated other comprehensive loss

 

 

(162,383 )

 

 

(107,039 )

Total invested equity

 

 

34,074

 

 

 

63,807

 

 

 

 

 

 

 

 

 

 

Total liabilities and invested equity

 

$ 68,382

 

 

$ 109,336

 

 

 

 

 

 

 

 

 

 

See the accompanying notes to these carve-out financial statements

 

 
Page 11

 

 

SEO BUTLER LIMITED

(FORMERLY i2W LTD)

CARVE-OUT STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDING NOVMBER 30, 2021 AND 2020

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Sales

 

$ 720,610

 

 

$ 899,030

 

Cost of sales

 

 

366,382

 

 

 

366,898

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

354,228

 

 

 

532,132

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

140,189

 

 

 

262,271

 

Total operating expenses

 

 

140,189

 

 

 

262,271

 

 

 

 

 

 

 

 

 

 

Net income from operations

 

 

214,039

 

 

 

269,861

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSES):

 

 

 

 

 

 

 

 

Interest Income

 

 

2

 

 

 

-

 

Total other income (expense)

 

 

2

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net income before income taxes

 

 

214,041

 

 

 

269,861

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

(29,424 )

 

 

(38,154 )

 

 

 

 

 

 

 

 

 

NET INCOME

 

 

184,617

 

 

 

231,707

 

OTHER COMPREHENSIVE INCOME (LOSS)

 

 

 

 

 

 

 

 

Unrealized foreign currency gain (loss), net of tax

 

 

(55,344 )

 

 

(108,348 )

COMPREHENSIVE INCOME (LOSS)

 

$ 129,273

 

 

$ 123,359

 

 

 

 

 

 

 

 

 

 

See the accompanying notes to these carve-out financial statements

 

 
Page 12

 

 

SEO BUTLER LIMITED

(FORMERLY i2W LTD)

STATEMENTS OF CHANGES IN NET PARENT INVESTMENT

FOR THE YEARS ENDED NOVEMBER 31, 2021 AND 2020

 

 

 

 

 

 

 

 

 

 

 

 

Net parent investment

 

 

Other Comprehensive Income

 

 

Total Net Parent Investment

 

Balance, November 30, 2019

 

$ 4,759

 

 

 

1,309

 

 

$ 6,068

 

Invested equity returned to SEO Butler

 

 

(65,620 )

 

 

-

 

 

 

(65,620 )

Comprehensive income (loss)

 

 

231,707

 

 

 

(108,348 )

 

 

123,359

 

Balance, November 30, 2020

 

 

170,846

 

 

 

(107,039 )

 

 

63,807

 

Invested equity returned to SEO Butler

 

 

(159,006 )

 

 

-

 

 

 

(159,006 )

Comprehensive income (loss)

 

 

184,617

 

 

 

(55,344 )

 

 

129,273

 

Balance, November 30, 2021

 

$ 196,457

 

 

$ (162,383 )

 

$ 34,074

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See the accompanying notes to these carve out financial statements

 

 
Page 13

 

 

SEO BUTLER LIMITED

(FORMERLY i2W LTD)

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDING NOVEMBER 30, 2021 AND 2020

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$ 184,617

 

 

$ 231,707

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation expense

 

 

6,567

 

 

 

3,843

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(63 )

 

 

-

 

Prepaids

 

 

6,407

 

 

 

(1,096 )

Accounts payable and other accrued expenses

 

 

(10,959 )

 

 

34,318

 

Net cash provided by operating activities

 

 

186,569

 

 

 

268,7721

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of fixed assets

 

 

-

 

 

 

-

 

Net cash used in investing activities

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Net parent investment returned to SEO Butler

 

 

(159,006 )

 

 

(65,620 )

Net cash provided by (used in) financing activities

 

 

(159,006 )

 

 

(65,620 )

 

 

 

 

 

 

 

 

 

Foreign currency effect on cash

 

 

(55,100 )

 

 

(108,211 )

 

 

 

 

 

 

 

 

 

Net change in cash

 

 

(27,537 )

 

 

94,941

 

 

 

 

 

 

 

 

 

 

Cash at beginning of period

 

 

95,856

 

 

 

915

 

 

 

 

 

 

 

 

 

 

Cash at end of period

 

$ 68,319

 

 

$ 95,856

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$ -

 

 

$ -

 

Cash paid for taxes

 

$ 40,866

 

 

$ 3,484

 

 

 

 

 

 

 

 

 

 

See the accompanying notes to these financial statements

 

 

 

 
Page 14

 

 

SEO BUTLER LIMITED

(FORMERLY i2W Ltd.)

NOTES TO CARVE OUT FINANCIAL STATEMENTS

AS OF NOVEMBER 30, 2021 and 2020

 

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

 

Nature of Operations

 

SEO BUTLER LIMITED (which may be referred to as the “Company”, “we,” “us,” or “our”) is a Limited Liability Company organized under the laws of England and Whales as of November 19, 2014 as i2W LTD. On March 1, 2021, the Company changed its name to SEO Butler LTD. Prior to December 2, 2021, the company was operated a sole proprietorship. The Company provides online resources for writing online content that best utilizes Search Engine Optimization (“SEO”) through its website www.seobutler.com.

 

Basis of Presentation

 

The SEO Butler Business (the “SEO Business”) has not historically constituted a separate legal group and stand-alone financial statements have not previously been prepared for the Business. The SEO Business represents the online writing resources business of the Company. The carve-out financial statements reflect allocations of direct and indirect expenses related to certain support functions that are provided on a centralized basis by the Company. These expenses have been allocated to the SEO Business on the basis of direct usage when identifiable, with others allocated based on relevant data criteria, such as the SEO Business percentage share of revenue, cost of sales or gross margin percentage of the Company.

 

The accompanying carve-out financial statements present the historical financial position, results of operations and changes in comprehensive income, changes in net parent investment and cash flows of the Business as it was historically managed and are presented in accordance with accounting principles generally accepted in the United States. In the opinion of management, all adjustments considered necessary for the fair presentation of the unaudited financial statements for the years presented have been included.

 

These financial statements have been prepared on a stand-alone basis derived from the financial statements and related accounting records of the Company. The financial information in these financial statements does not include all the expenses that would have been incurred had the SEO Business operated as a separate stand-alone entity and accordingly, may not reflect results of operations, financial position and cash flows had the SEO business been a stand-alone company during the fiscal years ended November 31, 2021 and 2020. It is not practicable to estimate the differences between the costs allocated by The Company and those that would have been incurred had the SEO Business been a stand-alone company during the periods presented.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America ("US GAAP"). The accompanying unaudited financial statements do not include all the information and notes required by GAAP for complete financial statements.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results could materially differ from these estimates. It is reasonably possible that changes in estimates will occur in the near term.

 

Significant estimates inherent in the preparation of the accompanying financial statements include revenue recognition and contingencies.

 

 
Page 15

 

 

Risks and Uncertainties

 

The Company's business and operations are sensitive to general business and economic conditions in the United States and other countries that the Company operates in. A host of factors beyond the Company's control could cause fluctuations in these conditions. Adverse conditions may include recession, downturn or otherwise, local competition or changes in consumer taste. These adverse conditions could affect the Company's financial condition and the results of its operations.

 

Concentration of Credit Risk

 

The Company maintains its cash with major financial institutions located in Great Britain, which it believes to be credit worthy. The Financial Services Compensation Scheme insures balances up to £85,000. At times, the Company may maintain balances in excess of the federally insured limits.

 

Cash and Cash Equivalents

 

The Company considers short-term, highly liquid investment with original maturities of three months or less at the time of purchase to be cash equivalents. Cash consists of funds held in the Company’s checking account. As of November 30, 2021 and 2020 the Company had $68,319 and $95,856 of cash on hand, respectively.

 

Property and Equipment

 

Property and equipment is recorded at cost and depreciated over its useful lives using the straigh0tline depreciation method.

 

Fair Value Measurements

 

Generally accepted accounting principles define fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and such principles also establish a fair value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority):

 

 

·

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

 

 

 

 

·

Level 2 – Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means.

 

 

 

 

·

Level 3 – Prices or valuation techniques requiring inputs that are both significant to the fair value measurement and unobservable.

 

The Company has no assets or liabilities valued using level 1, level 2, or level 3 inputs as of November 30, 2021 or 2020.

 

 
Page 16

 

 

Foreign Currency Translation and Transaction Gains (Losses)

 

The Company maintains its accounting records in pounds U.K. Pound Sterling, which is the Company’s functional currency. Assets and liabilities are translated into U.S. dollars at exchange rates at the balance sheet date, equity accounts are translated at historical exchange rate and revenues and expenses are translated by using the average exchange rates for the period. Translation adjustments are reported as a separate component of other comprehensive income (loss) in the consolidated statements of operations and comprehensive loss. Foreign currency denominated transactions are translated at exchange rates approximating those in effect at the transaction dates.

 

Income Taxes

 

The provision for income taxes is determined using the asset and liability approach considering guidance related to uncertain tax positions. Tax laws require items to be included in tax filings at different times than the items are reflected in the financial statements. A current liability is recognized for the estimated taxes payable for the current year. Deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. Deferred taxes are initially recognized at enacted tax rates and are adjusted for any enacted changes in tax rates and tax laws. Subsequent changes to deferred taxes originally recognized in equity are recognized in income. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

 

The income tax effects from an uncertain tax position are recognized when it is more likely than not that the position will be sustained based on its technical merits and consideration of the tax authorities widely understood administrative practices and precedents. Recognized income tax positions are measured at the largest amount that has a greater than 50% likelihood of being realized upon settlement. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to uncertain tax positions in the provision for “provision for income taxes” on the Carve out Statements of Comprehensive Income.

 

Revenue Recognition;

 

The Company recognizes revenue in accordance with ASC 606 when it has satisfied the performance obligations under an arrangement with the customer reflecting the terms and conditions under which products or services will be provided, the fee is fixed or determinable, and collection of any related receivable is probable. ASC Topic 606, “Revenue from Contracts with Customers” establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: 1) identify the contract with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to performance obligations in the contract; and 5) recognize revenue as the performance obligation is satisfied.

 

The Company’s sole performance obligation under its contracts with customers is to provide writing content services to the customers. The revenue under these contracts is recognized over time as services are provided to the customer. There is no significant financing component to the Company’s contracts with customers.

 

Advertising

 

The Company expenses advertising costs as they are incurred.

 

Recent Accounting Pronouncements

 

The Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.

 

 
Page 17

 

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02). Under ASU No. 2016-2, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU No. 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, ASU No. 2016-02 is effective for annual reporting periods beginning after December 15, 2021, including interim reporting periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on the Company’s financial statements.

 

This ASU was amended by ASU 2020-05 and is effective for annual periods beginning after December 15, 2021. On July 30, 2018, the FASB issued ASU 2018-11, Leases (Topic 842) – Targeted Improvements, which provides an optional transition method of applying the new leases standard at the adoption date by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Additionally, only incremental direct leasing costs may be capitalized under the new guidance. Any indirect incremental leasing costs must be expensed as incurred. The Company does not expect the adoption of ASU 2016-02 and related amendments to have a material impact on its financial statements.

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses. The main objective of this guidance is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity. To achieve this, the amendments in this guidance replace the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Specifically, the amendments in this guidance require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. This guidance is effective for fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact on its financial statements and related disclosures.

 

 
Page 18

 

 

NOTE 3 – COMMITMENTS AND CONTINGENCIES

 

The Company, from time to time, may be involved with lawsuits arising in the ordinary course of business. In the opinion of the Company's management, any liability resulting from such litigation would not be material in relation to the Company's consolidated financial position, results of operations and cash flows. There is no pending or threatened litigation.

 

NOTE 4 – SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through December 29, 2022, the date the financial statements were available to be issued. Based on this evaluation, no additional material events were identified which require adjustment or disclosure in the financial statements except as disclosed below.

 

On October 6, 2022, the Company entered into a Share Purchase Agreement (“Share Purchase Agreement”) with Onfolio Holdings, Inc., a company incorporated and registered in the state of Delaware (“Buyer”), and Jonathan Kiekbusch, Ezekiel Daldy, and Lyndsay Kiekbusch, shareholders of the Company (collectively, the “Guarantors” or the “Sellers”), for the purchase of all of the issued share capital of SEO Butler Limited (“Sale Shares”). The Guarantors have agreed to guarantee to the Company the due and punctual performance, observance and discharge by the Seller of all the Guaranteed Obligations (as defined in the Share Purchase Agreement) if and when they become performable or due under the Share Purchase Agreement.

 

Pursuant to the Share Purchase Agreement, and on the terms and subject to the conditions contained therein, at the closing, the Buyer purchased the Sale Shares from the Sellers, all as more fully described in the Share Purchase Agreement. The aggregate purchase price paid by the Company was $950,000. The transaction closed on October 13, 2022 and will be accounted for as a business combination under ASC 805.

 

 
Page 19

 

EX-99.2 3 onfolio_ex992.htm EX-99.2 onfolio_ex992.htm

EXHIBIT 99.2

 

BCP MEDIA, INC.

 

 

 

Table of Contents

 

 

 

 

 

 

 

 

Page

 

Financial Statements for the Six Months June 30, 2022 and 2021:

 

 

 

 

 

 

 

Balance Sheets

 

2

 

 

 

 

 

Statements of Operations

 

3

 

 

 

 

 

Statements of Stockholders' Deficit

 

4

 

 

 

 

 

Statements of Cash Flows

 

5

 

 

 

 

 

Notes to Financial Statements

 

6-10

 

 

 

 

 

Financial Statements for the Years ended December 31, 2021 and 2020:

 

 

 

 

 

 

 

Independent Auditor’s Report

 

11-12

 

 

 

 

 

Balance Sheets

 

13

 

 

 

 

 

Statements of Operations

 

14

 

 

 

 

 

Statements of Stockholders' Deficit

 

15

 

 

 

 

 

Statements of Cash Flows

 

16

 

 

 

 

 

Notes to Financial Statements

 

17-22

 

 

 

 

 

BCP MEDIA, INC.

Unaudited Balance Sheets

 

 

 

June 30

2022

 

 

December 31

2021

 

 

 

 

 

 

 

 

ASSETS

 

Current assets:

 

 

 

 

 

 

Cash

 

$ 833,434

 

 

$ 503,237

 

Accounts receivable

 

 

-

 

 

 

-

 

Deferred contract costs

 

 

93,404

 

 

 

88,737

 

Prepaids and other current assets

 

 

2,545

 

 

 

22,858

 

Total current assets

 

 

929,383

 

 

 

614,832

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

9,996

 

 

 

11,657

 

 

 

 

 

 

 

 

 

 

Total assets

 

$ 939,379

 

 

$ 626,489

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$ 1,206

 

 

$ 59,203

 

Accrued liabilities

 

 

28

 

 

 

88,557

 

Contract liabilities

 

 

516,014

 

 

 

617,854

 

Total current liabilities

 

 

517,248

 

 

 

765,614

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

517,248

 

 

 

765,614

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Common Stock

 

 

93

 

 

 

93

 

Additional paid-in capital

 

 

215,487

 

 

 

160,939

 

Accumulated deficit

 

 

206,051

 

 

 

(300,157 )

Total stockholders' equity

 

 

422,131

 

 

 

(139,125 )

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$ 939,379

 

 

$ 626,489

 

 

See accompanying notes to unaudited financial statements.

 

 
Page 2

 

 

BCP MEDIA, INC.

Unaudited Statements of Operations

For the Six Months Ended June 30, 2022 and 2021

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

REVENUE

 

$ 1,650,558

 

 

$ 2,082,661

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

Advertising

 

 

511,869

 

 

 

479,547

 

Officer and employee compensation

 

 

184,005

 

 

 

235,268

 

Affiliate payouts

 

 

191,421

 

 

 

466,858

 

Legal and Professional

 

 

127,489

 

 

 

264,533

 

General and administrative

 

 

128,827

 

 

 

145,047

 

Total operating expenses

 

 

1,143,611

 

 

 

1,591,253

 

 

 

 

 

 

 

 

 

 

Net income (loss) from operations

 

 

506,947

 

 

 

491,408

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSES):

 

 

 

 

 

 

 

 

Other income

 

 

-

 

 

 

23,526

 

Interest Expense

 

 

-

 

 

 

(11,973 )

Total other income (expense)

 

 

-

 

 

 

11,553

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$ 506,947

 

 

$ 502,961

 

 

See accompanying notes to unaudited financial statements.

 

 
Page 3

 

 

BCP MEDIA, INC.

Unaudited Statements of Stockholders' Deficit

For the Six Months Ended June 30, 2022 and 2021

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

 

 

 

 

 

Shares

 

 

Amount

 

 

Paid-in Capital

 

 

Deficit

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2020

 

 

9,000

 

 

$ 90

 

 

$ 50,942

 

 

$ (278,470 )

 

$ (227,438 )

Share-based compensation

 

 

 

 

 

 

 

 

 

 

54,548

 

 

 

-

 

 

 

54,548

 

Owner distributions

 

 

 

 

 

 

 

 

 

 

-

 

 

 

(364,905 )

 

 

(364,905 )

Net income

 

 

 

 

 

 

-

 

 

 

-

 

 

 

502,961

 

 

 

502,961

 

Balance, June 30, 2021

 

 

9,000

 

 

$ 90

 

 

$ 105,490

 

 

$ (140,414 )

 

$ (34,834 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2021

 

 

9,333

 

 

 

93

 

 

 

160,939

 

 

 

(300,157 )

 

 

(300,064 )

Share-based compensation

 

 

 

 

 

 

 

 

 

 

54,548

 

 

 

-

 

 

 

54,548

 

Owner distributions

 

 

 

 

 

 

 

 

 

 

-

 

 

 

(239 )

 

 

(239 )

Net income

 

 

 

 

 

 

-

 

 

 

 

 

 

 

506,947

 

 

 

506,947

 

Balance, June 30, 2022

 

 

9,333

 

 

$ 93

 

 

$ 215,487

 

 

$ 206,551

 

 

$ 261,192

 

 

See accompanying notes to unaudited financial statements.

 

 
Page 4

 

  

BCP MEDIA, INC.

Unaudited Statements of Cash Flows

For the Six Months Ended June 30, 2022 and 2021

 

 

 

2022

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net Income (Loss)

 

$ 561,495

 

 

$ 557,509

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

1,661

 

 

 

1,661

 

Stock-based compensation

 

 

-

 

 

 

-

 

Forgiveness of PPP Loan payable

 

 

-

 

 

 

(23,526 )

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

-

 

 

 

3,560

 

Deferred contract costs

 

 

(4,667 )

 

 

61,615

 

Due from related parties

 

 

-

 

 

 

30,000

 

Prepaid expenses and other current assets

 

 

20,313

 

 

 

17,003

 

Accounts payable

 

 

(57,997 )

 

 

(291,167 )

Accrued liabilities

 

 

(88,529 )

 

 

(83,848 )

Contract liabilities

 

 

(101,840 )

 

 

(222,976 )

Net cash used in operating activities

 

 

330,436

 

 

 

49,831

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

-

 

 

 

-

 

Net cash provided by (used in) investing activities

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Owner contributions

 

 

-

 

 

 

-

 

Owner distributions

 

 

(239 )

 

 

(364,905 )

Proceeds from loan payable

 

 

-

 

 

 

-

 

Proceeds from sale of common stock

 

 

-

 

 

 

-

 

Net cash provided by financing activities

 

 

(239 )

 

 

(364,905 )

 

 

 

 

 

 

 

 

 

Net change in cash

 

 

330,197

 

 

 

(315,074 )

 

 

 

 

 

 

 

 

 

Cash at beginning of period

 

 

503,237

 

 

 

755,829

 

 

 

 

 

 

 

 

 

 

Cash at end of period

 

$ 833,434

 

 

$ 440,755

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

 

-

 

 

 

-

 

Cash paid for taxes

 

 

-

 

 

 

-

 

 

See accompanying notes to unaudited financial statements.

 

 
Page 5

 

  

Notes to Unaudited Financial Statements

 

Note 1 - Description of business and summary of significant accounting policies:

 

BCP Media, Inc. (the Company), an e-commerce company incorporated under the laws of the state of Florida in May 2015, is engaged in the business of empowering people to reach their full potential by helping originate business strategies and income streams for individuals who want to develop entrepreneurial plans and work for themselves. Revenues are generated primarily from the Proofread Anywhere© brand, which provides training in proofreading and marketing methods to help customers build remote businesses. The Company is headquartered in Winter Park, Florida and sells to customers throughout the world.

 

Basis of presentation

 

The accompanying financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).

 

Use of estimates in the preparation of financial statements

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements. The reported amounts of revenues and expenses during the reporting period may be affected by the estimates and assumptions we are required to make. Estimates that are critical to the accompanying financial statements relate principally to the estimated period that course content is provided to customers and the valuation of share-based compensation. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary. It is at least reasonably possible that our estimates could change in the near term with respect to these matters.

 

Fair value hierarchy

 

The Company utilizes a valuation technique to measure the fair value of assets and liabilities by using a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs. The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Accordingly, the fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

 

 

·

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

 

 

 

 

·

Level 2 - Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly;

 

 

 

 

·

Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

 

A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company's assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.

 

The fair value of share-based compensation were determined utilizing Level 3 inputs, which included the use of a discounted cash flow model and a sales approach. There have been no changes in the methodology used at June 30, 2022.

 

 
Page 6

 

 

The methodology described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methodology is appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

 

There were no significant transfers between Level 1 and Level 2 or into or out of Level 3 during the six months ended June 30, 2022 and 2021.

 

Revenue and cost recognition

 

The Company accounts for revenues from contracts with customers under FASB Accounting Standards Codificaton 606, Revenue from Contracts with Customers, which provides for the recognition of revenue to depict the transfer of goods and services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods and services. Revenue is comprised of direct sales of various single proofreading courses, a coaching program, subscription-based solutions to proprietary content, and books and other products. Revenue is recognized in an amount that reflects the amount of consideration the Company expects to be entitled in exchange for transferring goods and services to the customer.

 

The majority of the Company's revenue relates to sales of access to the Company's course content that allows a customer to earn a completion document, although the majority of the customers utilize the courses for educational purposes. These courses are delivered through online portals. The Company identified one performance obligation consisting of customer access to course content. As the customer simultaneously receives and consumes the benefit provided by the Company's courses, the Company determined that over time recognition is appropriate. Accordingly, the Company recognizes revenue over time using historical experience, which approximates the period that the customer accesses course content.

 

The Company also generates a portion of revenue from its subscription-based solution offerings, which provide the customer online access to the Company's proprietary content. Revenue is recognized ratably over the contract term, which is generally one year.

 

The Company further generates revenue from the sale of books and other products, which provide the customer with the right to take possession of the products, either in tangible or electronic form. Revenue for the sale of books and other products is recognized when products are shipped or possession and control of products have otherwise been transferred to the customer.

 

A portion of the Company's revenue is generated from commissions earned through a strategic alliance and affiliate programs. Under the terms of the strategic alliance, the Company earns commissions of 10% of gross sales net of refunds generated by the alliance partner. The Company earns commissions that range from 20% to 50% of each referred sale under various affiliate programs. Revenue from commissions is recognized monthly as it is earned.

 

Deferred revenue (a contract liability) is recorded when amounts charged to customers are collected in advance of satisfaction of the Company's performance obligations. Contract liabilities totaled approximately $516,000 and $618,000 at June 30, 2022 and December 31, 2021, respectively, and are presented as contract liabilities in the accompanying balance sheets.

 

During the six months ended June 30, 2022 and 2021, the Company recognized approximately $1,445,000 and $1,835,000 in revenue over time as services are delivered and the remaining $206,000 and $248,000 at a point in time, respectively.

 

Accounts receivable

 

Consideration in exchange for transferring goods and services to customers are collected at the time the goods and services are transferred, which results in no accounts receivable being recognized. Revenue generated from sales made through partners is stated at the amount management expects to collect, which generally is not significant. The Company has no accounts receivable at June 30, 2022.

 

 
Page 7

 

 

Affiliate payouts

 

The Company incurs costs that are incremental to obtaining a contract, which generally relate to commissions paid to third-party affiliates (affiliate payouts) for the referral of customers who purchase a course. Affiliate payouts with expected amortization periods of more than one year are capitalized and amortized over the expected period of benefit, which the Company determined to be between 15 and 18 months, based on the period of customer access to course content. Capitalized affiliate payouts totaled approximately $93,000 and $89,000 at June 30, 2022 and December 31, 2021, respectively, and are presented as deferred contract costs in the accompanying balance sheets. Affiliate payouts expense totaled approximately $191,000 and $467,000 for the six months ended June 30, 2022 and 2021, respectively, and are included in operating expenses in the accompanying statements of operations. When the expected amortization period is one year or less, the Company charges the affiliate payout to expense as incurred.

 

Cash and cash equivalents

 

For purposes of the statements of cash flows, we consider all highly-liquid investments purchased with an original maturity of three months or less to be cash equivalents.

 

Property and equipment

 

Property and equipment, which is comprised of computer equipment, is stated at cost. Major additions are capitalized whereas expenditures for maintenance and repairs and minor additions are charged to operations as incurred. Depreciation is provided using the straight- line method over the estimated useful lives of 5 years.

 

Impairment of long-lived assets

 

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

 

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured at the amount by which the carrying amount of the assets exceeds the fair value of the assets. There were no impairment charges recognized during the six months ended June 30, 2022.

 

Advertising

 

The Company expenses all advertising costs as incurred. Advertising costs were approximately $512,000 and $480,000 for the six months ended June 30, 2022 and 2021, respectively.

 

Income taxes

 

The Company has elected to be treated as an S Corporation for income tax purposes, and is therefore not subject to income taxes; rather, the results of the Company's operations flow through to the Company's stockholders for inclusion in their personal income tax returns.

 

Therefore, the accompanying financial statements do not include any provision and/or liability for income taxes. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authority, based on the technical merits of the position. All federal and state income tax positions taken or anticipated to be taken in the income tax returns are attributable to the owners and not to the entity. As of June 30, 2022, there are no known items which would result in a material accrual related to where the Company has federal or state attributable tax positions.

 

 
Page 8

 

 

Note 2 - Line of credit:

 

The Company had a line of credit with Seacoast National Bank that allowed for maximum borrowing of $250,000. Any advances on the line bore interest at the prime rate plus 1% and were secured by substantially all of the Company's assets and the unconditional personal guaranty of the Company's majority stockholder. No amounts were drawn on the line since its inception on November 9, 2020. The line of credit was closed on May 4, 2022.

 

Note 3 - PPP loan payable:

 

On April 29, 2020, the Company received a loan in the amount of $20,832 under the Payroll Protection Program (PPP loan payable). The loan accrued interest at a rate of 1%.

 

Under the requirements of the Coronavirus Aid, Relief, and Economic Security Act, as amended by the PPP Flexibility Act and Consolidated Appropriations Act, 2021, proceeds may only be used for the Company's eligible payroll costs (with salary capped at $100,000 on an annualized basis for each employee), or other eligible costs related to rent, mortgage interest, utilities, covered operations expenditures, covered property damage, covered supplier costs, and covered worker protection expenditures, in each case paid during the 8-week or 24-week period following disbursement. The PPP loan payable may be fully forgiven if (i) proceeds are used to pay eligible payroll costs or other eligible costs and (ii) full-time employee headcount and salaries are either maintained during the 8-week or 24-week period following disbursement or restored by December 31, 2020. If not maintained or restored, any forgiveness of the PPP loan payable would be reduced in accordance with the regulations that were issued by the Small Business Administration (SBA). All the proceeds of the PPP loan payable were used by the Company to pay eligible payroll costs and the Company maintained its headcount and otherwise complied with the terms of the PPP loan payable.

 

The Company was legally released from the PPP loan payable by the SBA on June 8, 2021, and recognized $20,832 of forgiveness of debt income which is included in other income in the accompanying 2021 statement of operations.

 

Note 4 - Transactions with related parties:

 

Due from related parties consists of $30,000 of advances made to two officers of the Company during the year ended December 31, 2020. The advances are unsecured, non- interest bearing, and due on demand. During the six months ended June 30, 2021, the advances were repaid through the offset against bonuses earned by the officers.

 

Note 5 - Share-based compensation:

 

As part of an employment agreement with the Company's Chief Executive Officer (CEO) (the Agreement) discussed in Note 6, and assuming the CEO remains in the employ of the Company, the Agreement entitles the CEO to receive equity in the Company equal to 10% of the outstanding shares. The shares vested 33.333% on July 15, 2021, and will vest 33.333% on July 15, 2022, and 33.334% on July 15, 2023. Irrespective of such vesting schedule, any unvested and/or ungranted shares will vest immediately if the executive dies or is disabled, or if there is change in control of the Company (assuming the CEO is employed by the Company immediately prior to the occurrence of any such events).

 

Share-based compensation expense related to the Agreement is expensed over the service term and was $54,548 and $54,548 for the six months ended June 30, 2022 and 2021, respectively, which is included in officer and employee compensation in operating expenses in the statements of operations. Total share-based compensation expense related to non- vested awards not yet recognized was approximately $115,000 at June 30, 2022. Based on the nature of the award and the employment status of the recipient, the Company is anticipating no significant forfeitures in future periods.

 

Note 6 - Commitment:

 

The Company is obligated to its CEO and its Executive Chairman under separate employment agreements dated July 15, 2020, which have initial terms of three years and automatically renew thereafter for succeeding terms of one year unless otherwise terminated in accordance with the terms of the agreements. In addition to the rights and obligations discussed in Note 5, the employment agreements provide the executives with stated minimum annual salaries totaling $300,000, and the rights to be eligible to receive annual performance-based bonuses up to $247,500. The agreements also provide the officers with certain other employment benefits. In the event the CEO's employment with the Company is terminated without cause or by the CEO with good reason, both of which as defined in the Agreement, the Company will be obligated to pay the CEO one year of his then-current base salary and then-current maximum bonus.

 

 
Page 9

 

 

Note 7 - Concentration of credit risk:

 

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash. The Company maintains all of its cash in deposit accounts with one financial institution and two reputable payment processing platforms. Cash deposit balances with the financial institution frequently exceed federally-insured limits and amounts held by the payment processing platforms are not insured by FDIC. The Company has not experienced any losses in such accounts.

 

Note 8 - Risks and uncertainties:

 

In March 2020, the World Health Organization declared the novel coronavirus (COVID-19) outbreak a pandemic and the President of the United States declared it a national emergency. The COVID-19 pandemic remains subject to the development and severity of new variants. The extent of the impact of COVID-19 on operations and financial results will depend on future developments, including the duration and spread of the outbreak within the markets in which the Company operates, government actions and programs, and the related impact on consumer confidence and spending, all of which are highly uncertain.

 

Note 9 - Settlement:

 

In July 2021, the Company discovered a security incident. The Company's investigation indicated that the affiliate management software used to track and pay affiliate payouts was infiltrated causing excess payments to be made in 2021 and 2020. The Company resolved the incident in the third quarter of 2021 and received an insurance settlement of $250,000, which is included in other income in the accompanying 2021 statement of operations. In addition, the Company recovered approximately $188,000 in excess affiliate payments in 2021, which are included in affiliate payouts in the accompanying 2021 statement of operations. The Company has since changed affiliate management software providers to prevent future similar occurrences.

 

Note 10 – Subsequent events:

 

The Company has evaluated subsequent events through December 29, 2022, which is the date these financial statements were available to be issued. All subsequent events, if any, requiring recognition as of June 30, 2022, have been incorporated into these financial statements.

 

On October 13, 2022, the Company entered into an Asset Sale and Purchase Agreement (“Onfolio Asset Purchase Agreement”) with Onfolio Holdings, Inc., a Delaware corporation (“Onfolio”), and Caitlin Pyle and Cody Lister, principals of BCP Media.

 

Pursuant to the Onfolio Asset Purchase Agreement, the Company sold to onfolio, substantially all the Proofreading Business (defined below) assets of the Company and assigned the acquired assets to Onfolio, which, pursuant to the Onfolio Asset Purchase Agreement and certain ancillary agreements, will operate the business of online proofreading training (the “Proofreading Business”) via the following websites: ProofreadAnywhere.com, WorkAtHomeSchool.com, and WorkYourWay2020.com.

 

Pursuant to the Onfolio Asset Purchase Agreement, and subject to the terms and conditions contained therein, the Company sold to Onfolio the purchased assets, all as more fully described in the Onfolio Asset Purchase Agreement. The purchase price was paid as follows: $4,499,000, plus a warrant to purchase up to 20,000 shares of the Company’s common stock at the price of $4.75 per share (the “Warrant”), with $2,100,000 paid in cash at the closing and $2,399,000 paid via a promissory note (the “Onfolio Note”).

 

The Onfolio Note was made by the Company from Onfolio. The Onfolio Note has the principal sum of $2,399,000 (the “Loan Amount”) and it matures on the one year anniversary from the date of the Onfolio Note (the “Maturity Date”). Interest on the outstanding principal balance of, and all other sums owing under the Loan Amount, is three percent (3%) (the “Interest Rate”), compounded annually. Upon the occurrence of an Event of Default (as defined in the Onfolio Note), the Interest Rate automatically increases to the rate of eight percent (8%) per annum, compounded annually. The Loan Amount is payable as follows: (i) commencing on the date that is thirty (30) days from the date of the Onfolio Note, and continuing monthly on such same day thereafter, the Company shall receive interest only payment from Onfolio equal to $5,997.50 per month; and (ii) the entire Loan Amount, together with all accrued but unpaid interest thereon, shall be due and payable on the Maturity Date.

 

The transaction closed on October 14, 2022 and will be accounted for as a business combination under ASC 805.

 

 
Page 10

 

 

401 E. Jackson Street Suite 2425

Tampa, Florida 33602

813.559.6400

www.frazierdeeter.com

 

INDEPENDENT AUDITOR'S REPORT

 

To the Stockholders

BCP Media, Inc.

Winter Park, FL

 

Opinion

 

We have audited the financial statements of BCP Media, Inc. (an S Corporation) (the Company), which comprise the balance sheets as of December 31, 2021 and 2020, and the related statements of operations, stockholders' deficit, and cash flows for the years then ended, and the related notes to the financial statements.

 

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of BCP Media, Inc. as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

Responsibilities of Management for the Financial Statements

 

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statement that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.

 

 
Page 11

 

 

Auditor's Responsibilities for the Audit of the Financial Statements

 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

 

In performing an audit in accordance with GAAS, we:

 

 

·

Exercise professional judgment and maintain professional skepticism throughout the audit.

 

 

 

 

·

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

 

 

 

 

·

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.

 

 

 

 

·

Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

 

 

 

 

·

Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.

 

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

 

 

 

June 7, 2022

 

 
Page 12

 

 

BCP MEDIA, INC.

Balance Sheets

 

 

 

December 31

2021

 

 

December 31

2020

 

 

 

 

 

 

 

 

ASSETS

 

Current assets:

 

 

 

 

 

 

Cash

 

$ 503,237

 

 

$ 755,829

 

Accounts receivable

 

 

-

 

 

 

3,560

 

Deferred contract costs

 

 

88,737

 

 

 

148,003

 

Due from related party

 

 

 

 

 

 

30,000

 

Prepaids and other current assets

 

 

22,858

 

 

 

17,003

 

Total current assets

 

 

614,832

 

 

 

954,395

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

11,657

 

 

 

14,989

 

 

 

 

 

 

 

 

 

 

Total assets

 

$ 626,489

 

 

$ 969,384

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$ 59,203

 

 

$ 292,373

 

Accrued liabilities

 

 

88,557

 

 

 

98,114

 

Contract liabilities

 

 

617,854

 

 

 

785,503

 

Total current liabilities

 

 

765,614

 

 

 

1,175,990

 

 

 

 

 

 

 

 

 

 

PPP Loan Payable

 

 

 

 

 

 

20,832

 

Total liabilities

 

 

765,614

 

 

 

1,196,822

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Common Stock

 

 

93

 

 

 

90

 

Additional paid-in capital

 

 

160,939

 

 

 

50,942

 

Accumulated deficit

 

 

(300,157 )

 

 

(278,470 )

Total stockholders' equity

 

 

(139,125 )

 

 

(227,438 )

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$ 626,489

 

 

$ 969,384

 

 

 
Page 13

 

 

BCP MEDIA, INC.

Statements of Operations

For the Years Ended December 31, 2021 and 2020

 

 

 

2021

 

 

2020

 

Revenues

 

$ 3,762,496

 

 

$ 4,059,530

 

Operating expenses:

 

 

 

 

 

 

 

 

Advertising

 

 

1,097,664

 

 

 

903,309

 

Officer and employee compensation

 

 

702,793

 

 

 

447,751

 

Affiliate payouts

 

 

575,533

 

 

 

917,630

 

Contract labor

 

 

265,631

 

 

 

640,706

 

Legal and professional fees

 

 

220,232

 

 

 

95,158

 

Merchant fees

 

 

121,316

 

 

 

140,313

 

Technology

 

 

96,969

 

 

 

106,483

 

Insurance

 

 

30,163

 

 

 

9,318

 

General and administrative

 

 

7,142

 

 

 

26,315

 

Contributions

 

 

3,495

 

 

 

35,570

 

Depreciation

 

 

3,332

 

 

 

1,666

 

Other

 

 

14,413

 

 

 

39,582

 

Total operating expenses

 

 

3,138,683

 

 

 

3,363,801

 

Operating income

 

 

623,813

 

 

 

695,729

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest expense

 

 

(14,702 )

 

 

(2,026 )

Forgiveness of PPP loan payable

 

 

20,832

 

 

 

-

 

Other income

 

 

250,000

 

 

 

-

 

Total other income (expense)

 

 

256,130

 

 

 

(2,026 )

Net income

 

$ 879,943

 

 

$ 693,703

 

 

 
Page 14

 

 

BCP MEDIA, INC.

Statements of Stockholders' Deficit

For the Years Ended December 31, 2021 and 2020

 

 

 

Common Stock

 

 

Treasury Stock

 

 

Additional Paid-In

 

 

Accumulated

 

 

Total Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

Balance, December 31, 2019

 

 

9,000

 

 

$ 90

 

 

$ -

 

 

$ 10

 

 

$ (138,391 )

 

$ (138,291 )

Share-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

50,932

 

 

 

-

 

 

 

50,932

 

Distributions

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(833,782 )

 

 

(833,782 )

Net income - 2020

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

693,703

 

 

 

693,703

 

Balance, December 31, 2020

 

 

9,000

 

 

 

90

 

 

 

-

 

 

 

50,942

 

 

 

(278,470 )

 

 

(227,438 )

Share-based compensation

 

 

333

 

 

 

3

 

 

 

-

 

 

 

109,997

 

 

 

-

 

 

 

110,000

 

Distributions

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(901,630 )

 

 

(901,630 )

Net income - 2021

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

879,943

 

 

 

879,943

 

Balance, December 31, 2021

 

 

9,333

 

 

$ 93

 

 

$ -

 

 

$ 160,939

 

 

$ (300,157 )

 

$ (139,125 )

 

See notes to financial statements.

 

 
Page 15

 

 

Statements of Cash Flows

 

Increase (Decrease) in Cash and Cash Equivalents

 

For the Year Ended December 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$ 879,943

 

 

$ 693,703

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

3,332

 

 

 

1,666

 

Share-based compensation

 

 

110,000

 

 

 

50,932

 

Forgiveness of PPP loan payable

 

 

(20,832 )

 

 

-

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

3,560

 

 

 

(3,560 )

Deferred contract costs

 

 

59,266

 

 

 

(72,732 )

Due from related parties

 

 

30,000

 

 

 

(30,000 )

Prepaid expenses and other current assets

 

 

(5,855 )

 

 

(17,003 )

Accounts payable

 

 

(233,170 )

 

 

238,645

 

Accrued liabilities

 

 

(9,557 )

 

 

23,815

 

Contract liabilities

 

 

(167,649 )

 

 

386,704

 

Net cash provided by operating activities

 

 

 

 

 

 

 

 

 

 

 

649,038

 

 

 

1,272,170

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Acquisition of property and equipment

 

 

-

 

 

 

(16,655 )

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Distributions

 

 

(901,630 )

 

 

(833,782 )

Proceeds from PPP loans payable

 

 

-

 

 

 

20,832

 

Net cash used in financing activities

 

 

(901,630 )

 

 

(812,950 )

Net (decrease) increase in cash and cash equivalents

 

 

(252,592 )

 

 

442,565

 

Cash and cash equivalents, beginning of year

 

 

755,829

 

 

 

313,264

 

Cash and cash equivalents, end of year

 

$ 503,237

 

 

$ 755,829

 

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$ 14,702

 

 

$ 2,026

 

 

See notes to financial statements.

 

 
Page 16

 

 

Notes to Financial Statements December 31, 2021 and 2020

 

Note 1 - Description of business and summary of significant accounting policies:

 

BCP Media, Inc. (the Company), an e-commerce company incorporated under the laws of the state of Florida in May 2015, is engaged in the business of empowering people to reach their full potential by helping originate business strategies and income streams for individuals who want to develop entrepreneurial plans and work for themselves. Revenues are generated primarily from the Proofread Anywhere© brand, which provides training in proofreading and marketing methods to help customers build remote businesses. The Company is headquartered in Winter Park, Florida and sells to customers throughout the world.

 

Basis of presentation

 

The accompanying financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).

 

Use of estimates in the preparation of financial statements

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements. The reported amounts of revenues and expenses during the reporting period may be affected by the estimates and assumptions we are required to make. Estimates that are critical to the accompanying financial statements relate principally to the estimated period that course content is provided to customers and the valuation of share-based compensation. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary. It is at least reasonably possible that our estimates could change in the near term with respect to these matters.

 

Fair value hierarchy

 

The Company utilizes a valuation technique to measure the fair value of assets and liabilities by using a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs. The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Accordingly, the fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

 

 

·

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

 

 

 

 

·

Level 2 - Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly;

 

 

 

 

·

Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

 

 
Page 17

 

 

A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company's assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.

 

The fair value of share-based compensation were determined utilizing Level 3 inputs, which included the use of a discounted cash flow model and a sales approach. There have been no changes in the methodology used at December 31, 2021 and 2020.

 

The methodology described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methodology is appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

 

There were no significant transfers between Level 1 and Level 2 or into or out of Level 3 during the years ended December 31, 2021 and 2020.

 

Revenue and cost recognition

 

The Company accounts for revenues from contracts with customers under FASB Accounting Standards Codificaton 606, Revenue from Contracts with Customers, which provides for the recognition of revenue to depict the transfer of goods and services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods and services. Revenue is comprised of direct sales of various single proofreading courses, a coaching program, subscription-based solutions to proprietary content, and books and other products. Revenue is recognized in an amount that reflects the amount of consideration the Company expects to be entitled in exchange for transferring goods and services to the customer.

 

The majority of the Company's revenue relates to sales of access to the Company's course content that allows a customer to earn a completion document, although the majority of the customers utilize the courses for educational purposes. These courses are delivered through online portals. The Company identified one performance obligation consisting of customer access to course content. As the customer simultaneously receives and consumes the benefit provided by the Company's courses, the Company determined that over time recognition is appropriate. Accordingly, the Company recognizes revenue over time using historical experience, which approximates the period that the customer accesses course content.

 

The Company also generates a portion of revenue from its subscription-based solution offerings, which provide the customer online access to the Company's proprietary content. Revenue is recognized ratably over the contract term, which is generally one year.

 

 
Page 18

 

 

The Company further generates revenue from the sale of books and other products, which provide the customer with the right to take possession of the products, either in tangible or electronic form. Revenue for the sale of books and other products is recognized when products are shipped or possession and control of products have otherwise been transferred to the customer.

 

A portion of the Company's revenue is generated from commissions earned through a strategic alliance and affiliate programs. Under the terms of the strategic alliance, the Company earns commissions of 10% of gross sales net of refunds generated by the alliance partner. The Company earns commissions that range from 20% to 50% of each referred sale under various affiliate programs. Revenue from commissions is recognized monthly as it is earned.

 

Deferred revenue (a contract liability) is recorded when amounts charged to customers are collected in advance of satisfaction of the Company's performance obligations. Contract liabilities totaled approximately $618,000 and $786,000 at December 31, 2021 and 2020, respectively, and are presented as contract liabilities in the accompanying balance sheets. Contract liabilities totaled approximately $399,000 at December 31, 2019.

 

During the years ended December 31, 2021 and 2020, the Company recognized approximately $3,294,000 and $3,577,000 in revenue over time as services are delivered and the remaining $468,000 and $482,000 at a point in time, respectively.

 

Accounts receivable

 

Consideration in exchange for transferring goods and services to customers are collected at the time the goods and services are transferred, which results in no accounts receivable being recognized. Revenue generated from sales made through partners is stated at the amount management expects to collect, which generally is not significant. The Company has no accounts receivable at December 31, 2019.

 

Affiliate payouts

 

The Company incurs costs that are incremental to obtaining a contract, which generally relate to commissions paid to third-party affiliates (affiliate payouts) for the referral of customers who purchase a course. Affiliate payouts with expected amortization periods of more than one year are capitalized and amortized over the expected period of benefit, which the Company determined to be between 15 and 18 months, based on the the period of customer access to course content. Capitalized affiliate payouts totaled approximately $89,000 and $148,000 at December 31, 2021 and 2020, respectively, and are presented as deferred contract costs in the accompanying balance sheets. Affiliate payouts expense totaled approximately $576,000 and $918,000 for the years ended December 31, 2021 and 2020, respectively, and are included in operating expenses in the accompanying statements of operations. When the expected amortization period is one year or less, the Company charges the affiliate payout to expense as incurred.

 

 
Page 19

 

 

Cash and cash equivalents

 

For purposes of the statements of cash flows, we consider all highly-liquid investments purchased with an original maturity of three months or less to be cash equivalents.

 

Property and equipment

 

Property and equipment, which is comprised of computer equipment, is stated at cost. Major additions are capitalized whereas expenditures for maintenance and repairs and minor additions are charged to operations as incurred. Depreciation is provided using the straight- line method over the estimated useful lives of 5 years.

 

Impairment of long-lived assets

 

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

 

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured at the amount by which the carrying amount of the assets exceeds the fair value of the assets. There were no impairment charges recognized during the years ended December 31, 2021 and 2020.

 

Advertising

 

The Company expenses all advertising costs as incurred. Advertising costs were approximately $1,098,000 and $903,000 for the years ended December 31, 2021 and 2020, respectively.

 

Income taxes

 

The Company has elected to be treated as an S Corporation for income tax purposes, and is therefore not subject to income taxes; rather, the results of the Company's operations flow through to the Company's stockholders for inclusion in their personal income tax returns. 

 

Therefore the accompanying financial statements do not include any provision and/or liability for income taxes. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authority, based on the technical merits of the position. All federal and state income tax positions taken or anticipated to be taken in the income tax returns are attributable to the owners and not to the entity. As of December 31, 2021, there are no known items which would result in a material accrual related to where the Company has federal or state attributable tax positions.

 

Subsequent events

 

The Company has evaluated subsequent events through June 7, 2022, which is the date these financial statements were available to be issued. All subsequent events, if any, requiring recognition as of December 31, 2021, have been incorporated into these financial statements.

 

 
Page 20

 

 

Note 2 - Line of credit:

 

The Company had a line of credit with Seacoast National Bank that allowed for maximum borrowing of $250,000. Any advances on the line bore interest at the prime rate plus 1% and were secured by substantially all of the Company's assets and the unconditional personal guaranty of the Company's majority stockholder. No amounts were drawn on the line since its inception on November 9, 2020. The line of credit was closed on May 4, 2022.

 

Note 3 - PPP loan payable:

 

On April 29, 2020, the Company received a loan in the amount of $20,832 under the Payroll Protection Program (PPP loan payable). The loan accrued interest at a rate of 1%.

 

Under the requirements of the Coronavirus Aid, Relief, and Economic Security Act, as amended by the PPP Flexibility Act and Consolidated Appropriations Act, 2021, proceeds may only be used for the Company's eligible payroll costs (with salary capped at $100,000 on an annualized basis for each employee), or other eligible costs related to rent, mortgage interest, utilities, covered operations expenditures, covered property damage, covered supplier costs, and covered worker protection expenditures, in each case paid during the 8-week or 24-week period following disbursement. The PPP loan payable may be fully forgiven if (i) proceeds are used to pay eligible payroll costs or other eligible costs and (ii) full-time employee headcount and salaries are either maintained during the 8-week or 24-week period following disbursement or restored by December 31, 2020. If not maintained or restored, any forgiveness of the PPP loan payable would be reduced in accordance with the regulations that were issued by the Small Business Administration (SBA). All the proceeds of the PPP loan payable were used by the Company to pay eligible payroll costs and the Company maintained its headcount and otherwise complied with the terms of the PPP loan payable.

 

The Company was legally released from the PPP loan payable by the SBA on June 8, 2021, and recognized $20,832 of forgiveness of debt income which is included in other income in the accompanying 2021 statement of operations.

 

Note 4 - Transactions with related parties:

 

Due from related parties consists of $30,000 of advances made to two officers of the Company during the year ended December 31, 2020. The advances are unsecured, non- interest bearing, and due on demand. During the year ended December 31, 2021, the advances were repaid through the offset against bonuses earned by the officers.

 

Note 5 - Share-based compensation:

 

As part of an employment agreement with the Company's Chief Executive Officer (CEO) (the Agreement) discussed in Note 6, and assuming the CEO remains in the employ of the Company, the Agreement entitles the CEO to receive equity in the Company equal to 10% of the outstanding shares. The shares vested 33.333% on July 15, 2021, and will vest 33.333% on July 15, 2022, and 33.334% on July 15, 2023. Irrespective of such vesting schedule, any unvested and/or ungranted shares will vest immediately if the executive dies or is disabled, or if there is change in control of the Company (assuming the CEO is employed by the Company immediately prior to the occurrence of any such events).

 

 
Page 21

 

 

Share-based compensation expense related to the Agreement is expensed over the service term and was $110,000 and $50,932 for the years ended December 31, 2021 and 2020, respectively, which is included in officer and employee compensation in operating expenses in the statements of operations. Total share-based compensation expense related to non- vested awards not yet recognized was approximately $169,000 and $279,000 at December 31, 2021 and 2020, respectively. Based on the nature of the award and the employment status of the recipient, the Company is anticipating no significant forfeitures in future periods.

 

Note 6 - Commitment:

 

The Company is obligated to its CEO and its Executive Chairman under separate employment agreements dated July 15, 2020, which have initial terms of three years and automatically renew thereafter for succeeding terms of one year unless otherwise terminated in accordance with the terms of the agreements. In addition to the rights and obligations discussed in Note 5, the employment agreements provide the executives with stated minimum annual salaries totaling $300,000, and the rights to be eligible to receive annual performance-based bonuses up to $247,500. The agreements also provide the officers with certain other employment benefits. In the event the CEO's employment with the Company is terminated without cause or by the CEO with good reason, both of which as defined in the Agreement, the Company will be obligated to pay the CEO one year of his then-current base salary and then-current maximum bonus.

 

Note 7 - Concentration of credit risk:

 

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash. The Company maintains all of its cash in deposit accounts with one financial institution and two reputable payment processing platforms. Cash deposit balances with the financial institution frequently exceed federally-insured limits and amounts held by the payment processing platforms are not insured by FDIC. The Company has not experienced any losses in such accounts.

 

Note 8 - Risks and uncertainties:

 

In March 2020, the World Health Organization declared the novel coronavirus (COVID-19) outbreak a pandemic and the President of the United States declared it a national emergency. The COVID-19 pandemic remains subject to the development and severity of new variants. The extent of the impact of COVID-19 on operations and financial results will depend on future developments, including the duration and spread of the outbreak within the markets in which the Company operates, government actions and programs, and the related impact on consumer confidence and spending, all of which are highly uncertain.

 

Note 9 - Settlement:

 

In July 2021, the Company discovered a security incident. The Company's investigation indicated that the affiliate management software used to track and pay affiliate payouts was infiltrated causing excess payments to be made in 2021 and 2020. The Company resolved the incident in the third quarter of 2021 and received an insurance settlement of $250,000, which is included in other income in the accompanying 2021 statement of operations. In addition, the Company recovered approximately $188,000 in excess affiliate payments in 2021, which are included in affiliate payouts in the accompanying 2021 statement of operations. The Company has since changed affiliate management software providers to prevent future similar occurrences.

 

 
Page 22

 

EX-99.3 4 onfolio_ex993.htm EX-99.3 onfolio_ex993.htm

EXHIBIT 99.3

 

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

The following unaudited pro forma combined financial data are presented to illustrate the effect of the following acquisitions (“the Acquisitions”):

 

1. the October 13, 2022, acquisition by the Company, from i2W Ltd, a company incorporated and registered in England and Wales (“Seller”), and Jonathan Kiekbusch, Ezekiel Daldy, and Lyndsay Kiekbusch, shareholders of the Seller (collectively, the “Guarantors”), for the purchase of all of the issued share capital (“Sale Shares”) of SEO Butler Limited, under the “i2W Share Purchase Agreement”. Seller is the owner of the legal and beneficial title to the Sale Shares of SEO Butler Limited ("SEO Butler"), which operates as a productised service business operated via the seobutler.com website and the custom build order management system on orders.seobutler.com and under the SEOButler and PBNButler names, which will be know as “SEO Butler” (the “SEO Butler Acquisition”); and

 

2. the October 14, 2022, acquisition (the “BCP Media Acquisition”) by the Company, from BCP Media, Inc., a Florida corporation (“BCP Media”), and Caitlin Pyle and Cody Lister, principals of BCP Media under the Asset Purchase Agreement (“BCP Agreement”). Pursuant to the BCP Agreement, the Company purchased from BCP Media, substantially all the Proofreading Business (defined below) assets of BCP Media and assigned the acquired assets to the Company, which, pursuant to the BCP Asset Purchase Agreement and certain ancillary agreements, will operate the business of online proofreading training (the “Proofreading Business”) via the following websites: ProofreadAnywhere.com, WorkAtHomeSchool.com, and WorkYourWay2020.com. Collectively, the acquired companies of SEO Butler and BCP Media will be referred to as the “Acquired Businesses.”

  

The following unaudited pro forma combined balance sheet data as of June 30, 2022 is presented as if the Acquisitions had occurred on June 30, 2022. The following unaudited pro forma combined statement of operations data for the six months ended June 30, 2022 and the year ended December 31, 2021 is presented as if the Acquisitions occurred on January 1, 2021.

 

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 Businesses assets, liabilities and results of operations presented herein were derived from the audited financial statements of the Acquired Businesses for the years ended December 31, 2021 and 2020, the unaudited interim financial statements for the six months ended June 30, 2022 for BCP Media, and for the years ended November 30, 2021 and 2020 and the unaudited interim financial statements for the six months ended May 31, 2022 for SEO Butler (collectively, 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, 2021, which were included in the Company’s Form S-1 Registration Statement for the year ended December 31, 2021, as filed with the Securities and Exchange Commission on April 7, 2022, as amended (the “ Registration Statement”), (b) the historical unaudited consolidated quarterly financial statements and accompanying notes thereto of the Company for the six months ended June 30, 2022, which were included in the Company’s Form 10-Q for the six months ended June 30, 2022, as filed with the Securities and Exchange Commission on August 15, 2022 and (c) the Acquired Business Financial Statements, which are included as Exhibits 99.1 [and 99.2] to this Current Report on Form 8-K/A of which these Unaudited Pro Forma Combined Financial Statements are included as Exhibit 99.2/[99.3].

 

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 Registration Statement and the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, as filed with the Commission on November 11, 2022.

 

 

 

 

ONFOLIO HOLDINGS, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

AS OF JUNE 30, 2022

 

 

 

Consolidated Historical

June 30, 2022

 

 

SEO Butler

 

 

SEO Butler Pro Forma Adjustments

(See Notes)

 

 

 

BCP

Media

 

 

BCP Media Pro Forma Adjustments

(See Notes)

 

 

 

Other Transaction Accounting Adjustments

(See Notes)

 

 

 

Combined Pro Forma

June 30, 2022

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$ 424,720

 

 

$ 87,221

 

 

 

(950,000 )

 

{a)

 

$ 833,434

 

 

 

(2,933,434 )

 

(a)

 

$ 12,434,485

 

 

(f)

 

$ 9,896,426

 

Accounts receivable, net

 

 

37,650

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

37,650

 

Deferred contract costs

 

 

 

 

 

 

 

 

 

 

-

 

 

 

 

 

93,404

 

 

 

(93,404 )

 

(c)

 

 

 

 

 

 

 

 

-

 

Inventory

 

 

108,194

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

108,194

 

Prepaid expenses and other current assets

 

 

211,426

 

 

 

 

 

 

 

-

 

 

 

 

 

2,545

 

 

 

(2,545 )

 

(c)

 

 

(179,016 )

 

(f)

 

 

32,410

 

Total current assets

 

 

781,990

 

 

 

87,221

 

 

 

(950,000 )

 

 

 

 

929,383

 

 

 

(3,029,383 )

 

 

 

 

12,255,469

 

 

 

 

 

10,074,680

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed Assets, net

 

 

-

 

 

 

 

 

 

 

-

 

 

 

 

 

9,996

 

 

 

(9,996 )

 

(c)

 

 

 

 

 

 

 

 

-

 

Intangible assets

 

 

1,308,260

 

 

 

 

 

 

 

506,000

 

 

(d)

 

 

 

 

 

 

1,826,000

 

 

(d)

 

 

 

 

 

 

 

 

3,640,260

 

Due from related party

 

 

138,786

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

138,786

 

Investment in unconsolidated joint ventures, cost method

 

 

160,901

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

160,901

 

Investment in unconsolidated joint ventures, equity method

 

 

278,263

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

278,263

 

Goodwill

 

 

-

 

 

 

 

 

 

 

357,020

 

 

(e)

 

 

 

 

 

 

3,249,014

 

 

(e)

 

 

 

 

 

 

 

 

3,606,034

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

TOTAL ASSETS

 

 

2,668,200

 

 

 

87,221

 

 

 

(86,980 )

 

 

 

 

939,379

 

 

 

2,035,635

 

 

 

 

 

12,255,469

 

 

 

 

 

17,898,924

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and other current liabilities

 

 

295,181

 

 

 

241

 

 

 

-

 

 

 

 

 

1,234

 

 

 

(1,234 )

 

(c)

 

 

 

 

 

 

 

 

295,422

 

Dividends payable

 

 

45,351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45,351

 

Due to joint ventures

 

 

185,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

185,000

 

Acquisition notes payable

 

 

17,323

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,323

 

Notes Payable

 

 

41,363

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

 

2,399,000

 

 

(b)

 

 

 

 

 

 

 

 

2,440,363

 

Contingent consideration

 

 

 

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

 

-

 

 

(b)

 

 

 

 

 

 

 

 

-

 

Deferred Revenue

 

 

35,980

 

 

 

 

 

 

 

 

 

 

 

 

 

516,014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

551,994

 

Total current liabilities

 

 

620,198

 

 

 

241

 

 

 

-

 

 

 

 

 

517,248

 

 

 

2,397,766

 

 

 

 

 

-

 

 

 

 

 

3,535,453

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

620,198

 

 

 

241

 

 

 

-

 

 

 

 

 

517,248

 

 

 

2,397,766

 

 

 

 

 

-

 

 

 

 

 

3,535,453

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net parent investment

 

 

-

 

 

 

373,620

 

 

 

(373,620 )

 

(c)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Preferred stock

 

 

69

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

69

 

Common stock

 

 

2,356

 

 

 

-

 

 

 

-

 

 

 

 

 

93

 

 

 

(93 )

 

(c)

 

 

2,754

 

 

(f)

 

 

5,110

 

Additional paid-in capital

 

 

7,298,713

 

 

 

-

 

 

 

-

 

 

 

 

 

215,487

 

 

 

(155,487 )

 

(b), (c)

 

 

12,252,715

 

 

(f)

 

 

19,611,428

 

Retained earnings (accumulated deficit)

 

 

(5,253,136 )

 

 

(286,640 )

 

 

286,640

 

 

(c)

 

 

206,551

 

 

 

(206,551 )

 

(c)

 

 

-

 

 

 

 

 

(5,253,136 )

Total stockholders' equity

 

 

2,048,002

 

 

 

86,980

 

 

 

(86,980 )

 

 

 

 

422,131

 

 

 

(362,131 )

 

 

 

 

12,255,469

 

 

 

 

 

14,363,471

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$ 2,668,200

 

 

$ 87,221

 

 

$ (86,980 )

 

 

 

$ 939,379

 

 

$ 2,035,635

 

 

 

 

$ 12,255,469

 

 

 

 

$ 17,898,924

 

 

 

 

 

ONFOLIO HOLDINGS, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2022

 

 

 

Consolidated

Historical

June 30, 2022

 

 

SEO Butler

 

 

SEO Butler Pro Forma Adjustments

 

 

 

BCP Media

 

 

BCP Media Pro Forma Adjustments

 

 

 

Transaction Accounting Adjustments

 

 

 

Combined

Pro Forma 

June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$ 357,822

 

 

$ 332,527

 

 

$ -

 

 

 

 

$ 1,650,558

 

 

$ -

 

 

 

 

$ -

 

 

$ 2,340,907

 

Cost of revenues

 

 

208,112

 

 

 

210,573

 

 

 

-

 

 

 

 

 

703,290

 

 

 

-

 

 

 

 

 

-

 

 

 

1,121,975

 

Gross profit

 

 

149,710

 

 

 

121,954

 

 

 

-

 

 

 

 

 

947,268

 

 

 

-

 

 

 

 

 

-

 

 

 

1,218,932

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

1,031,663

 

 

 

51,773

 

 

 

44,583

 

 

(f)

 

 

312,832

 

 

 

140,917

 

 

(f)

 

 

-

 

 

 

1,581,768

 

Professional Fees

 

 

328,858

 

 

 

 

 

 

 

-

 

 

 

 

 

127,489

 

 

 

-

 

 

 

 

 

-

 

 

 

456,347

 

Total operating expenses

 

 

1,360,521

 

 

 

51,773

 

 

 

44,583

 

 

 

 

 

440,321

 

 

 

140,917

 

 

 

 

 

-

 

 

 

2,038,115

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

(1,210,811 )

 

 

70,181

 

 

 

(44,583 )

 

 

 

 

506,947

 

 

 

(140,917 )

 

 

 

 

-

 

 

 

(819,183 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Method Income

 

 

6,309

 

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

6,309

 

Dividend Income

 

 

1,333

 

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

1,333

 

Interest income (expense), net

 

 

1,144

 

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

(35,985 )

 

(g)

 

 

-

 

 

 

(34,841 )

Other income 

 

 

1,354

 

 

 

3

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

1,357

 

Other expense

 

 

(29,557 )

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

(29,557 )

Loss on sale of asset

 

 

(34,306 )

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

(34,306 )

Total other income (expense)

 

 

(53,723 )

 

 

3

 

 

 

-

 

 

 

 

 

-

 

 

 

(35,985 )

 

 

 

 

-

 

 

 

(89,705 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

(1,264,534 )

 

 

70,184

 

 

 

(44,583 )

 

 

 

 

506,947

 

 

 

(176,902 )

 

 

 

 

-

 

 

 

(908,888 )

Income tax benefit

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

Net income (loss)

 

 

(1,264,534 )

 

 

70,184

 

 

 

(44,583 )

 

 

 

 

506,947

 

 

 

(176,902 )

 

 

 

 

-

 

 

 

(908,888 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Dividends on Preferred stock

 

 

(45,728 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(45,728 )

Net income (loss) available to Common Shareholders

 

$ (1,310,262 )

 

$ 70,184

 

 

$ (44,583 )

 

 

 

$ 506,947

 

 

$ (176,902 )

 

 

 

$ -

 

 

$ (45,728 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$ (0.56 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$ (0.02 )

Diluted

 

$ (0.56 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$ (0.02 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

2,355,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,355,045

 

Diluted

 

 

2,355,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,355,045

 

 

 

 

 

 ONFOLIO HOLDINGS, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2021

 

 

 

Consolidated

Historical

December 31, 2021

 

 

SEO Butler

 

 

SEO Butler Pro Forma Adjustments

 

 

 

BCP

Media

 

 

BCP Media Pro Forma Adjustments

 

 

 

Other Transaction Accounting Adjustments

 

 

Combined

Pro Forma 

December 31, 2021

 

Revenues

 

$ 1,808,543

 

 

$ 720,610

 

 

$ -

 

 

 

 

$ 3,762,496

 

 

$ -

 

 

 

 

$ -

 

 

$ 6,291,649

 

Cost of revenues

 

 

1,073,509

 

 

 

366,382

 

 

 

-

 

 

 

 

 

1,673,197

 

 

 

-

 

 

 

 

 

-

 

 

 

3,113,088

 

Gross profit

 

 

735,034

 

 

 

354,228

 

 

 

-

 

 

 

 

 

2,089,299

 

 

 

-

 

 

 

 

 

-

 

 

 

3,178,561

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

2,479,152

 

 

 

140,189

 

 

 

89,167

 

 

 (g)

 

 

1,245,254

 

 

 

281,833

 

 

 (g)

 

 

-

 

 

 

4,425,396

 

Professional Fees

 

 

208,193

 

 

 

-

 

 

 

-

 

 

 

 

 

220,232

 

 

 

-

 

 

 

 

 

-

 

 

 

428,425

 

Total operating expenses

 

 

2,687,345

 

 

 

140,189

 

 

 

89,167

 

 

 

 

 

1,465,486

 

 

 

281,833

 

 

 

 

 

-

 

 

 

4,853,821

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

(1,952,311 )

 

 

214,039

 

 

 

(89,167 )

 

 

 

 

623,813

 

 

 

(281,833 )

 

 

 

 

-

 

 

 

(1,239,016 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Method Income

 

 

50,684

 

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

50,684

 

Dividend Income

 

 

9,970

 

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

9,970

 

Interest income (expense), net

 

 

(9,805 )

 

 

-

 

 

 

-

 

 

 

 

 

(14,702 )

 

 

(71,970 )

 

(h)

 

 

-

 

 

 

(97,677 )

Other income 

 

 

-

 

 

 

2

 

 

 

-

 

 

 

 

 

250,000

 

 

 

-

 

 

 

 

 

-

 

 

 

250,611

 

Forgiveness of debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

20,832

 

 

 

-

 

 

 

 

 

-

 

 

 

20,832

 

Total other income (expense)

 

 

50,849

 

 

 

2

 

 

 

-

 

 

 

 

 

256,130

 

 

 

(71,970 )

 

 

 

 

-

 

 

 

234,420

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

(1,901,462 )

 

 

214,041

 

 

 

(89,167 )

 

 

 

 

879,943

 

 

 

(353,803 )

 

 

 

 

-

 

 

 

(1,004,596 )

Income tax (provision) benefit

 

 

1,314

 

 

 

(29,424 )

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

(28,110 )

Net income (loss)

 

 

(1,900,148 )

 

 

184,617

 

 

 

(89,167 )

 

 

 

 

879,943

 

 

 

(353,803 )

 

 

 

 

-

 

 

 

(1,032,706 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Dividends on Preferred stock

 

 

(106,825 )

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

(106,825 )

Net income (loss) available to Common Shareholders

 

$ (2,006,973 )

 

$ 184,617

 

 

$ (89,167 )

 

 

 

$ 879,943

 

 

$ (353,803 )

 

 

 

$ -

 

 

$ (106,825 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$ (0.96 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$ (0.05 )

Diluted

 

$ (0.96 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$ (0.05 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

2,080,733

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,080,733

 

Diluted

 

 

2,080,733

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,080,733

 

 

 

 

 

ONFOLIO HOLDINGS, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

1.

DESCRIPTION OF TRANSACTIONS

 

SEO Butler Acquisition

 

On October 6, 2022, the Company entered into a Share Purchase Agreement (“Share Purchase Agreement”) with i2W Ltd, a company incorporated and registered in England and Wales (“Seller”), and Jonathan Kiekbusch, Ezekiel Daldy, and Lyndsay Kiekbusch, shareholders of the Seller (collectively, the “Guarantors”), for the purchase of all of the issued share capital (“Sale Shares”) of SEO Butler Limited, a company incorporated and registered in England and Wales (“SEO Butler”). Seller is the owner of the legal and beneficial title to the Sale Shares of SEO Butler, which operates as a productised service business operated via the seobutler.com website and the custom build order management system on orders.seobutler.com and under the SEOButler and PBNButler names. The Guarantors have agreed to guarantee to the Company the due and punctual performance, observance and discharge by the Seller of all the Guaranteed Obligations (as defined in the Share Purchase Agreement) if and when they become performable or due under the Share Purchase Agreement.

 

Pursuant to the Share Purchase Agreement, and on the terms and subject to the conditions contained therein, at the closing, the Company purchased the Sale Shares from the Seller, all as more fully described in the Share Purchase Agreement. The aggregate purchase price paid by the Company was $950,000. The transaction closed on October 13, 2022 and will be accounted for as a business combination under ASC 805.

 

BCP Media Acquisition

 

On October 13, 2022, the Company entered into an Asset Sale and Purchase Agreement (“BCP Asset Purchase Agreement”) with BCP Media, Inc., a Florida corporation (“BCP Media”), and Caitlin Pyle and Cody Lister, principals of BCP Media.

 

Pursuant to the BCP Asset Purchase Agreement, the Company purchased from BCP Media, substantially all the Proofreading Business (defined below) assets of BCP Media and assigned the acquired assets to the Company, which, pursuant to the BCP Asset Purchase Agreement and certain ancillary agreements, will operate the business of online proofreading training (the “Proofreading Business”) via the following websites: ProofreadAnywhere.com, WorkAtHomeSchool.com, and WorkYourWay2020.com.

 

Pursuant to the BCP Asset Purchase Agreement, and subject to the terms and conditions contained therein, BCP Media sold to the Company the purchased assets, all as more fully described in the BCP Asset Purchase Agreement. The purchase price was paid as follows: $4,499,000, plus a warrant to purchase up to 20,000 shares of the Company’s common stock at the price of $4.75 per share (the “Warrant”), with $2,100,000 paid in cash at the closing and $2,399,000 paid via a promissory note (the “BCP Note”).

 

The BCP Note was made by the Company to BCP Media. The BCP Note has the principal sum of $2,399,000 (the “Loan Amount”) and it matures on the one year anniversary from the date of the BCP Note (the “Maturity Date”). Interest on the outstanding principal balance of, and all other sums owing under the Loan Amount, is three percent (3%) (the “Interest Rate”), compounded annually. Upon the occurrence of an Event of Default (as defined in the BCP Note), the Interest Rate automatically increases to the rate of eight percent (8%) per annum, compounded annually. The Loan Amount is payable as follows: (i) commencing on the date that is thirty (30) days from the date of the BCP Note, and continuing monthly on such same day thereafter, the Company shall make an interest only payment to BCP Media equal to $5,997.50 per month; and (ii) the entire Loan Amount, together with all accrued but unpaid interest thereon, shall be due and payable on the Maturity Date.

 

The transaction closed on October 14, 2022 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 six months ended June 30, 2022 and the year ended December 31, 2021, gives effect to the Acquired Businesses as if it had occurred on January 1, 2022 and 2021, respectively and the pro forma combined balance sheet as of June 30, 2022 gives effect to the Acquisition as if it had occurred on June 30, 2022.

 

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.

 

SEO Butler Preliminary Purchase Price Allocation 

 

The acquisition of SEO Butler 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

 

$ 950,000

 

Total preliminary purchase consideration

 

$ 950,000

 

 

 

 

 

 

Preliminary Purchase Price Allocation

 

 

 

 

Cash

 

$ 87,221

 

Website domains

 

 

70,000

 

Customer relationships

 

 

316,000

 

Trademarks and trade names

 

 

90,000

 

Non-compete agreement

 

 

30,000

 

Liabilities assumed

 

 

(241 )

Goodwill

 

 

357,020

 

Net assets acquired

 

$ 950,000

 

 

BCP Media Preliminary Purchase Price Allocation 

 

The acquisition of BCP Media 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

 

$ 2,100,000

 

Promissory Note

 

 

2,399,000

 

Earn-out provision

 

 

60,000

 

Total preliminary purchase consideration

 

$ 4,559,000

 

 

 

 

 

 

Preliminary Purchase Price Allocation

 

 

 

 

Website domains

 

$ 130,000

 

Customer relationships

 

 

916,000

 

Trademarks and trade names

 

 

700,000

 

Non-compete agreement

 

 

80,000

 

Liabilities assumed – Deferred revenue

 

 

516,014

 

Goodwill

 

 

3,249,014

 

 Net assets acquired

 

$ 4,559,000

 

 

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:

 

Cash paid to sellers of SEO Butler

 

$ (950,000 )

Cash paid to sellers of BCP Media

 

 

(1,250,000 )

Remove historical cash of BCP Media

 

 

(233,107 )

Net pro forma impact to cash

 

$ 2,433,107

 

 

(b)

Other Consideration given for asset acquisitions consisting of:

 

Note payable bearing interest at 3% per annum with a maturity date of October 14, 2023

 

$ 2,399,000

 

Warrant for the purchase of Onfolio common shares at an exercise price of $4.75

 

 

60,000

 

Total other consideration given

 

$ 2,459,000

 

 

(c)

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

 

(d)

Estimated Fair Value of intangible assets acquired in acquisitions comprised of the following:

 

Intangible assets acquired from purchase of SEO Butler

 

$ 506,000

 

Intangible assets acquired from purchase of BCP Media

 

 

1,826,000

 

Total intangible assets acquired

 

$ 2,332,000

 

 

(e)

Estimated Fair Value of goodwill acquired in business acquisitions

 

Goodwill acquired from purchase of SEO Butler

 

$ 357,020

 

Goodwill acquired from purchase of BCP Media

 

 

3,249,014

 

Total Goodwill acquired

 

$ 3,606,034

 

 

 

 

 

(f)

On August 30, 2022, the Company completed its initial public offering, issuing 2,753,750 shares of common stock and 5,507,500 warrants (6,117,250 warrants including the option warrants), for net cash proceeds of $12,434,485. A portion of these proceeds were used to fund the cash portion of the consideration paid to the sellers of the Acquired Businesses. The Company also wrote off $179,016 of prepaid offering costs as a cost of capital of the initial public offering.

 

(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 Businesses.

 

 

 

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Cover
Oct. 13, 2022
Cover [Abstract]  
Entity Registrant Name ONFOLIO HOLDINGS INC.
Entity Central Index Key 0001825452
Document Type 8-K/A
Amendment Flag false
Entity Emerging Growth Company true
Document Period End Date Oct. 13, 2022
Entity Ex Transition Period false
Entity Incorporation State Country Code DE
Entity File Number 001-41466
Entity Tax Identification Number 37-1978697
Entity Address Address Line 1 1007 North Orange Street, 4th Floor
Entity Address City Or Town Wilmington
Entity Address State Or Province DE
Entity Address Postal Zip Code 19801
City Area Code 682
Local Phone Number 990-6920
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Common Stock, $0.001 par value per share
Trading Symbol ONFO
Security Exchange Name NASDAQ
XML 13 onfolio_8k_htm.xml IDEA: XBRL DOCUMENT 0001825452 2022-10-13 2022-10-13 iso4217:USD shares iso4217:USD shares 0001825452 false 8-K/A 2022-10-13 ONFOLIO HOLDINGS INC. DE 001-41466 37-1978697 1007 North Orange Street, 4th Floor Wilmington DE 19801 682 990-6920 false false false false Common Stock, $0.001 par value per share ONFO NASDAQ true false EXCEL 14 Financial_Report.xlsx IDEA: XBRL DOCUMENT begin 644 Financial_Report.xlsx M4$L#!!0 ( "-HG54'04UB@0 +$ 0 9&]C4')O<',O87!P+GAM M;$V./0L",1!$_\IQO;=!P4)B0-!2L+(/>QLOD&1#LD)^OCG!CVX>;QA&WPIG M*N*I#BV&5(_C(I(/ !47BK9.7:=N')=HI6-Y #OGDK7A.YNJQ<&4GPZ4A!0W_J=0U[R;UEA_6\#MI7E!+ P04 M " C:)U5 SV)?NX K @ $0 &1O8U!R;W!S+V-O&ULS9+! 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