Onfolio Holdings, Inc 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As required by Rule 13a-15(e) of the Exchange Act, our management has carried out an evaluation, with the participation and under the supervision of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as of December 31, 2022. Based upon, and as of the date of this evaluation, our Chief Executive Officer and Chief Financial Officer determined that our disclosure controls and procedures are not effective due to material weaknesses in our internal control over financial reporting as described below: Material Weakness in Internal Controls Over Financial Reporting We identified a material weakness in our internal control over financial reporting that exists as of December 31, 2022. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We determined that we had a material weakness because, due to our small size, and our limited number of personnel, we did not have in place an effective internal control environment with formal processes and procedures, including journal entry processing and review, to allow for a detailed review of accounting transactions that would identify errors in a timely manner. Notwithstanding the material weaknesses in our internal control over financial reporting, we have concluded that the audited financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America. Management’s Plan to Remediate the Material Weakness With the oversight of senior management, management is working towards remediation of these weaknesses in 2023 including addition of accounting personnel and to evaluate and implement procedures that will strengthen our internal controls. While we believe these measures will remediate the material weakness identified and strengthen our internal control over financial reporting, there is no assurance that we will demonstrate sufficient improvement that the material weakness will be remediated. We are committed to continuing to improve our internal control processes and will continue to diligently review our financial reporting controls and procedures. Management’s Annual Report on Internal Control over Financial Reporting This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the SEC for newly public companies. Changes in Internal Controls over Financial Reporting There have been no changes in our internal control over financial reporting during the fourth quarter of fiscal year 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. None. 52 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance Identity of directors, executive officers and significant employees Year First Elected Name Age Director Positions/Committees Independent Dominic Wells 37 2020 Chief Executive Officer, Chief Revenue Officer, Secretary, Treasurer, Director (Chair of Board) no Esbe van Heerden 30 President Yury Byalik 37 Head of Strategy and Acquisitions Adam Trainor 38 Chief Operations Officer Rob te Braake 39 Interim Chief Financial Officer Andrew Lawrence 52 2022 Director, Compensation Committee, Nominating and Corporate Governance Committee (Chair) yes David McKeegan 47 2022 Director, Compensation Committee, Audit Committee, Nominating and Corporate Governance Committee yes Robert J. Lipstein 67 2022 Director, Audit Committee (Chair) yes Mark N. Schwartz 66 2022 Director, Audit Committee, Compensation Committee (Chair) yes Business experience of directors, executive officers, and significant employees Dominic Wells. Dominic Wells has served as our Chief Executive Officer since August 2020 and as a Director since July 2020, and as Chief Executive Officer of Onfolio LLC since May 2019. He is responsible for developing and implementing our Company’s long term business strategy and direction. From August 2013 to April 2019, Mr. Wells was the founder and director of Digital Wells Limited (Hong Kong), where he grew the Company and the Human Proof Designs (Humanproofdesigns.com) website. Human Proof Designs is an internet marketing agency offering website creation, search engine optimization services, content marketing and content creation services, and affiliate marketing training. After founding Digital Wells Limited (Hong Kong) and growing it for 5 years, Mr. Wells exited the company in 2019. Mr. Wells’ qualifications to serve on our Board include his knowledge of our Company and his leadership at our Company. Mr. Wells completed a BA (Hons) in Media Practice & Theory from the University of Sussex, UK in 2006. Esbe van Heerden . Esbe van Heerden has served as our President since February 1, 2022, where she is responsible for implementing and developing our Company’s shorter term business strategy and our Company’s budgeting and performance tracking. Previously, she served as our Chief Operations Officer August 2020 to January 31, 2022, and as Chief Operations Officer of Onfolio LLC since May 2019. During her time at our Company, Ms. van Heerden has overseen an expansion from five team members, to 32, and monthly recuring revenue (MRR) growth of more than 700%. She joined our Company after successfully building a boutique publishing house, NonFiction LLC, that helped CEOs and consultants succeed in publishing their books. From June 2016 to December 2018, Ms. van Heerden built out the systems to guide new authors through the writing and publishing process, and grew to a team of 15+ staff members. Ms. van Heerden completed a triple major: a BSc in Biomedical Science, a BSc in Molecular Biology, as well as a BS in Forensic Biology and Toxicology, and was awarded the Vice-Chancellor’s Commendation for Academic Excellence. She graduated in 2015 from Murdoch University, Australia. Yury Byalik. Yury Byalik has served as the Head of Strategy and Acquisitions since May 2020 and has previously served as the Director of SEO from January 2020 when he first joined our Company. He is responsible for: building and maintaining a pipeline of acquisition targets, evaluating targets based on company acquisition criteria, performing due diligence and negotiation of acquisitions in cooperation with the CEO and company subject matter experts. He has 15+ years of experience in marketing having worked across many different industries and verticals, helping businesses grow revenue and traffic. Having the ability to work across a wide array of marketing industries and organizations has given him unique insights that he has leveraged for the benefit of our Company. From January 2018 to January 2019, Mr. Byalik served as the Lead Strategic Consultant for Epsilon, a Publicis Groupe subsidiary, where he helped advise clients on digital marketing strategies. From August 2016 to January 2018, Mr. Byalik worked at AJ Madison, a leading appliance retailer, first starting as SEO manager and later promoted to SEO director after successfully scaling their organic traffic and revenue. From November 2014 to August 2016, Mr. Byalik served as the Digital Marketing Manager at Graham & Brown, a UK-based wallpaper manufacturer and retailer, where he developed and implemented the U.S. eCommerce strategy to grow traffic, sales and improve customer experience. Mr. Byalik received his B.S. in Business from Pace University and his J.D. from Widener University School of Law. 53 Table of Contents Adam Trainor. Adam Trainor has served as our Chief Operations Officer since February 2022, and prior to that served as the director of a portfolio of our Company from November 2020 to January 2022, overseeing Vital Reaction LLC, Outreachama LLC, Getmerankings LLC, alongside various content/media properties. He is responsible for executing our business strategy and managing portfolio/department leadership. Before joining Onfolio, Mr. Trainor served as the CEO of Vital Reaction LLC, from April 2019 to December 2020. Mr. Trainor is also a board certified chiropractic physician and clinical nutritionist and has worked in a variety of pain management settings, including at Walter Reed National Military Medical Center in Bethesda, MD from November 2018 to April 2019. Also, from September 2010 to January 2019, Mr. Trainor served as the founder and CEO of Thirdspace LLC, an academic tutoring agency where he ran all aspects of the agency. Mr. Trainor graduated summa cum laude with a BA in History from Boston University in 2012. He also holds a Doctorate in chiropractic medicine (2019) and Masters of Science in clinical nutrition (2018) from the Northeast College of Health Sciences. Rob te Braake. Rob te Braake has served as our Interim Chief Financial Officer since January 1, 2023, where he is responsible for our Company’s financial and accounting matters, implementing and maintaining our financial controls and procedures, developing our Company’s financial projections and ensuring our Company’s legal compliance on all financial functions. Previously, Mr. te Braake served as a financial advisor to our Company since 2020, where he provided all bookkeeping services to all of the Company’s legal entities, as well performing finance/accounting related projects, through Calixtus Ltd, a business advisory firm that he owns. Since March 2017, Mr. te Braake served as a Director of Calixtus Ltd. Mr. te Braake has 5+ years of experience working as advisor, fractional CFO and similar roles to companies in similar industries as the Company and 10+ years of experience on the intersection of finance and international entrepreneurship. Andrew Lawrence. A.J. Lawrence has served as a director since January 2022. Since June 2006 he has been the founder and director of the JAR Group & subsidiaries (USA), where he grew the company to reach the Inc. 500 twice and win many industry awards. The JAR Group is an internet marketing agency offering analytics, media buying, search engine optimization services, content marketing, content creation services, and affiliate program management. After founding the JAR group and growing it for 10 years, Mr. Lawrence sold the media buying, SEO, and affiliate program management divisions of the company. Mr. Lawrence’s qualifications to serve on our Board include his knowledge of our industry, multiple angel investments, and advisory roles, and his executive management experience. Mr. Lawrence completed a BA in International Relations 1991 & an MBA in International Business in 1994 from the University of South Carolina. David McKeegan . David McKeegan has served as a Director since January 2022. Mr. McKeegan is the Co-founder and CEO of Greenback ETS which was founded in 2009 and serves thousands of U.S. expat clients around the world become and stay compliant with their U.S. taxes while overseas. He is also the Co-founder and CEO of GBS Tax and Bookkeeping, which was started in 2018 and serves entrepreneurs and startups who incorporate in the United States. Prior to Co-founding Greenback ETS, Mr. McKeegan was an Associate Director with the Bank of Scotland and worked on their syndicated loan desk for 5 years from 2005-2009. Mr. McKeegan’s qualifications to serve on our Board include his years of experience assisting corporations manage their finances, tax preparation documents and bookkeeping, along with his experience in finance and banking. Mr. McKeegan is an IRS Enrolled Agent, received his MBA from IESE in Barcelona, Spain in 2004 and his BA from Loyola College in Maryland in 2009. Mr. McKeegan also worked for JPMorgan Chase from 1997-2002. Robert J. Lipstein. Robert J. Lipstein has served as a director since March 2022. In 2021, Mr. Lipstein joined the board of directors of Firstrust Bank and since 2019 has been a board member of Seacoast Banking Corporation of Florida (NASDAQ:SBCF) where he chairs its Audit Committee and is a member of the Enterprise Risk Management Committee and a member of the Directors Credit Risk Committee. Since 2017 he has been a director at CrossCountry Consulting, a privately held consulting firm that focuses on corporate advisory services, and a board member of Einstein Healthcare Network. Mr. Lipstein joined the board of directors in of Infrasight Software in 2020, a start-up venture that provides software that powers Hybrid IT and Multi-Cloud business decisions. Mr. Lipstein previously served as an independent board member of Ocwen Financial (NYSE), a mortgage loan servicer where he was a member of the Audit Committee and Compensation Committee from 2017 to 2020. In addition, he is a retired KPMG senior partner where he held numerous leadership roles including, Global Partner in Charge of Sarbanes Oxley Services, Global Managing Partner of IT Business Services, Partner in Charge of KPMG’s financial service practice and partner in charge of KPMG’s advisory practice for the Mid-Atlantic region. Mr. Lipstein’s qualifications to serve on our Board include his experience as a public and private company board member and as a certified public accountant, in addition to his over 40 years of diversified business experience. He is a graduate of the University of Pennsylvania Director Institute, an Emeritus member of the Weinberg Center for Corporate Governance and he earned a Bachelor’s degree in Accounting from the University of Delaware. 54 Table of Contents Mark N. Schwartz. Mark Schwartz has served as a director since March 2022. Previously, from March 2017 to January 2021, he served as member of the Board of Directors and on the Audit and Compensation Committees of The Bartell Drug Company, a $500+ million pharmacy retailer where he led planning and implementation of a successful sale to Rite Aid Drug Corporation. From January 2016 to December 2019, Mr. Schwartz served as a member of the Board of Directors of Glass-Media Inc., an ad- tech software & hardware provider for display advertising, where he advised on successful rounds of company financing. From January 2012 to December 2015, Mr. Schwartz served as a member of the Board of Directors of Specialty Commodities, Inc., a natural, organic food products company selling and processing nuts, seeds, ancient grains, and pet foods, where he consulted on positioning and strategy for sale of the company to Archer Daniels Midland. Mr. Schwartz’s qualifications to serve on our Board include his extensive background as a public and private company CEO, CFO, and board member with experience planning and implementing profit improvement and exit strategies in a variety of consumer, technology, media and healthcare companies. He has extensive mergers and acquisitions, corporate finance, IPO, financial reporting systems, budgetary oversight, and financial and corporate strategy experience to accelerate revenues and profitability. He has served on several audit and compensation committees and has extensive SEC GAAP and Sarbanes-Oxley risk management expertise. Mr. Schwartz received a BA in economics and political science from Claremont McKenna College in 1978 and an MBA from Harvard Business School in 1980. He has attended the UCLA Anderson School Executive Education program in Corporate Governance in 2015. Each Member of our Board serves until the next annual meeting of stockholders, or until their successors have been duly elected. Each officer is elected annually by the Board and holds their office until they resign or are removed by the Board or otherwise disqualified to serve, or their successor is elected and qualified. During the past ten years, none of our directors or executive officers have been involved in any of the proceedings described in Item 401(f) of Regulation S-K. Code of Conduct Our Company has adopted a code of conduct applicable to its employees, directors and officers, in accordance with applicable U.S. federal securities laws and the corporate governance rules of Nasdaq. A copy of this code of conduct is available on our principal corporate website located at https://www.onfolio.com . Requests for a copy of the Code of Ethics and Business Conduct should be directed to Investor Relations, Onfolio Inc., 1007 North Orange Street, 4th Floor Wilmington, Delaware 19801. Any substantive amendments or waivers of the code of conduct or any similar code(s) subsequently adopted for senior financial officers may be made only by our Board and will be promptly disclosed as required by applicable U.S. federal securities laws and the corporate governance rules of Nasdaq, including by posting such information on our Company’s website or by filing a Form 8-K. Audit Committee We have a separately designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. Our Audit Committee is comprised of Robert Lipstein, Mark Schwartz and David McKeegan. Mr. Lipstein is the chairperson of the committee. Each member of the Audit Committee is “independent” within the meaning of Rule 10A-3 under the Exchange Act and the NASDAQ Stock Market Rules. Our Board of Directors has designated Robert Lipstein as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. The Audit Committee’s purpose and power are to (a) retain, oversee and terminate, as necessary, the auditors of our Company, (b) oversee our Company’s accounting and financial reporting processes and the audit and preparation of our Company’s financial statements, (c) exercise such other powers and authority as are set forth in the charter of the audit committee of the Board, and (d) exercise such other powers and authority as shall from time to time be assigned thereto by resolution of the Board. 55 Table of Contents The Audit Committee also has the power to investigate any matter brought to its attention within the scope of its duties and to retain counsel and advisors to fulfill its responsibilities and duties. During our last fiscal year, our Audit Committee held 2 meetings. Changes to Director Nomination Procedures No material changes to the procedures by which our stockholders may recommend nominees to our Board of Directors has occurred since we last provided disclosure regarding these procedures. Delinquent Section 16(a) Reports Section 16(a) of the Securities Exchange Act of 1934 requires that our executive officers and directors, and persons who own more than ten percent of a registered class of our equity securities, file reports of ownership and changes in ownership with the SEC. Executive officers, directors and greater-than-ten percent shareholders are required by SEC regulations to furnish us with all Section 16(a) forms they file. To the best of our knowledge, based solely upon a review of Forms 3 and 4 and amendments thereto furnished to our Company during its most recent fiscal year and Forms 5 and amendments thereto furnished to our Company with respect to its most recent fiscal year, and any written representation referred to in paragraph (b)(1) of Item 405 of Regulation S-K, all of our executive officers, directors and greater-than-ten percent shareholders complied with all Section 16(a) filing requirements with the following exceptions: each of Dominic Wells, Esbe van Heerden, Yury Byalik, Adam Trainor, Jack W. Hawkins, III, Andrew Lawrence, David McKeegan, Robert J. Lipstein, and Mark N. Schwartz filed one late Form 3, and Yury Byalik filed one late Form 4. Item 11. Executive Compensation The compensation committee of our Board of Directors oversees, reviews and approves all compensation decisions relating to our named executive officers. The table below summarizes all compensation awarded to, earned by, or paid to our 2022 named executive officers for the fiscal years ended December 31, 2022 and 2021. Our 2022 named executive officers are: Dominic Wells, Esbe van Heerden, Yury Byalik, Adam Trainor, and Jack Hawkins. 2022 Summary Compensation Table The table below summarizes all compensation awarded to, earned by, or paid to our named executive officers that earned more than $100,000 for the fiscal years ended December 31, 2022 and 2021: Name Year (1) Salary Option Awards (2) Total $ $ $ Dominic Wells 2022 150,000 - 150,000 Chief Executive Officer, Chief Revenue Officer, Secretary, Treasurer, Director 2021 120,000 - 120,000 Esbe van Heerden 2022 120,000 - 120,000 President 2021 - - - Yury Byalik 2022 84,000 - 84,000 Head of Strategy and Acquisitions 2021 - - - Adam Trainor 2022 96,000 92,432 188,432 Chief Operations Officer 2021 - - - Jack Hawkins, III(3) 2022 180,000 76,288 256,288 Chief Financial Officer (Principal Financial Officer) 2021 - - - 1. Other than Mr. Wells, all named executive officers commenced employment with our Company during 2022. 2. The grant date fair value of the stock awards and option awards computed in accordance with ASC Topic 718. 3. Mr. Hawkins resigned as our Chief Financial Officer on December 31, 2022. We grant stock awards and stock options to our executive officers based on their level of experience and contributions to our Company. The aggregate fair value of awards and options are computed in accordance with FASB ASC 718. The assumptions made in the computation may be found in Note 7 to our financial statements set forth elsewhere within this Report on Form 10-K. 56 Table of Contents At no time during the last fiscal year was any outstanding option otherwise modified or re-priced, and there was no tandem feature, reload feature, or tax-reimbursement feature associated with any of the stock options we granted to our executive officers or otherwise. Employee, Severance, Separation and Change in Control Agreements Dominic Wells Employment Agreement. On August 1, 2020, our Company entered into a written employment agreement with Mr. Wells as its Chief Executive Officer providing for an annual salary of $120,000 per year. On January 1, 2022, our Company entered into a new employment agreement with Mr. Wells as its Chief Executive Officer. Pursuant to this agreement, Mr. Wells receives an annual salary of $150,000, which is paid semi-monthly in accordance with our Company’s normal payroll procedures. Mr. Wells is also eligible to receive certain employee benefits and bonuses under any bonus under any bonus plan program that may be established by our Board of Directors. Mr. Wells also serves as a member of our Board for no additional compensation. Esbe van Heerden Employment Agreement. Our Company entered into an employment agreement dated February 1, 2022, with Ms. van Heerden as its President. Pursuant to the agreement, Ms. van Heerden receives an annual salary of $120,000, which is paid semi-monthly in accordance with our Company’s normal payroll procedures. Ms. van Heerden is also eligible to receive certain employee benefits and bonuses under any bonus plan program that may be established by our Board of Directors. Yury Byalik Employment Agreement Our Company entered into an employment agreement dated September 1, 2021, with Mr. Byalik as its Head of Strategy and Acquisitions. Pursuant to the agreement, Mr. Byalik receives an annual salary of $84,000, which is paid semi-monthly in accordance with our Company’s normal payroll procedures. Mr. Byalik is also eligible to receive certain employee benefits and bonuses under any bonus plan program that may be established by our Board of Directors. Adam Trainor Employment Agreement Our Company entered into an employment agreement dated February 1, 2022, with Mr. Trainor as its Chief Operations Officer. Pursuant to the agreement, Mr. Trainor receives an annual salary of $96,000, which is paid semi-monthly in accordance with our Company’s normal payroll procedures. Mr. Trainor is also eligible to receive certain employee benefits and bonuses under any bonus plan program that may be established by our Board of Directors. Additionally, in connection with his employment with the Company, Mr. Trainor was granted 21,000 non-qualified stock options pursuant to the Company’s 2020 Plan. The options have an exercise price of $5.95 per share. Jack Hawkins, III Employment Agreement Our Company entered into an employment agreement dated March 7, 2022, with Mr. Hawkins as its Chief Financial Officer. Mr. Hawkins resigned as our Chief Financial Officer on December 31, 2022. Pursuant to the agreement, Mr. Hawkins received an annual salary of $180,000. Mr. Hawkins was also eligible to receive certain employee benefits and bonuses under any bonus plan program that may be established by our Board of Directors. Additionally, in connection with his employment with the Company, Mr. Hawkins was granted 21,000 non- qualified stock options pursuant to the Company’s 2020 Plan. The options have an exercise price of $14.29 per share. Benefits and Other Compensation We maintain broad-based benefits that are provided to all of our employees, including reimbursement of private health insurance, tech allowances, and education and professional development plans, that named executive officers participate in. Executives are eligible to participate in all of our employee benefit plans, in each case on the same terms as our other employees. No employee benefit plans are in place solely for the benefit of our executives. 57 Table of Contents Change in Control Benefits Pursuant to the terms of our 2020 Equity Incentive Plan, our executives are entitled to certain benefits in the event of a change in control of our Company or the termination of their employment under specified circumstances, including termination following a change in control. We believe these benefits help us compete for and retain executive talent and are generally in line with severance packages offered to executives by the companies in our peer group. We also believe that these benefits would serve to minimize the distraction caused by any change in control scenario and reduce the risk that key talent would leave the Company before any such transaction closes, which could reduce the value of the Company if such transaction failed to close. Outstanding Equity Awards at Fiscal Year-End The table below summarizes all of the outstanding equity awards for our named executive officers as of December 31, 2022, our latest fiscal year end: Option Awards Stock Awards Number of securities underlying Number of Market value of unexercised options(#) Option Option Initial shares or units of stock that shares or units of stock that Name Exercisable Unexercisable exercise price($) expiration date vesting date have not vested have not vested Dominic Wells - - - - - - - Esbe van Heerden - - - - - 49,000 74,480 (1) Yury Byalik - - - - - 22,458 34,137 (1) Adam Trainor 2,016 4,704 2,184 12,096 5.95 5.95 1/1/25 2/28/25 1/1/22 2/28/22 - - (2) (3) Jack Hawkins, III 4,851 16,149 14.29 03/31/23 3/11/22 - - (4) Rob te Braake - - - - - 8,167 12,413 (1) 1. Vest monthly over 36 months, with 1/36 vesting each month beginning on August 1, 2020. 2. vest over a period of one and a half years at the rate of 252 per month beginning on January 1, 2022. 3. vest over a period of two years at the rate of 672 per month beginning on February 28, 2022. 4. Mr. Hawkins resigned as our Chief Financial Officer on December 31, 2022 and no additional options vest after that period. Director Compensation Compensation for our directors is discretionary and is reviewed from time to time by our Board of Directors. Any determinations with respect to Board compensation are made by our Board of Directors. On February 28, 2022, we adopted the following compensation plan for our independent directors who serve on our Board: a quarterly stipend of $7,500, with $5,000 and $2,500 payable in Company stock issued in arrears and cash, respectively. Additionally, the chair of our audit committee receives an additional quarterly stipend of $2,500 payable in cash. All directors are also entitled to reimbursement for travel expenses for attending director meetings. The following table summarizes compensation earned by our Company’s directors for the year ended December 31, 2022. All directors have been and will be reimbursed for reasonable expenses incurred in connection with attendance at meetings of the Board of Directors or other activities undertaken by them on behalf of our Company. Fees earned or paid in Stock cash awards Total Name ($) ($) ($) Dominic Wells (1) — — — Andrew Lawrence 10,000 4,167 14,167 David McKeegan 10,000 4,167 14,167 Robert J. Lipstein 20,000 4,167 24,167 Mark N. Schwartz 10,000 4,167 14,167 ——————— 1. Serves as an executive officer and a director, but receives no additional compensation for serving as a director. 58 Table of Contents Compensation Policies and Practices as They Relate to Our Risk Management Our compensation program for employees does not create incentives for excessive risk taking by our employees or involve risks that are reasonably likely to have a material adverse effect on us. Our compensation has the following risk-limiting characteristics: · Our base pay consists of competitive salary rates that represent a reasonable portion of total compensation and provide a reliable level of income on a regular basis, which decreases incentive on the part of our executives to take unnecessary or imprudent risks; · Option awards are not tied to formulas that could focus executives on specific short-term outcomes; and · Option awards, generally, have multi-year vesting which aligns the long-term interests of our executives with those of our shareholders and, again, discourages the taking of short-term risk at the expense of long-term performance. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth, as of March 31, 2023 the stock ownership of (1) each person or group known to our Company to beneficially own 5% or more of our common stock and (2) each director and Named Executive (as set forth in Item 11. Executive Compensation) individually, and (3) all directors and executive officers of our Company as a group. To our knowledge, except as set forth in the footnotes to this table and subject to applicable community property laws, each person named in the table below has sole voting and investment power with respect to the shares set forth opposite such person’s name. Except as otherwise indicated, the address of each of the persons in the table below is c/o Onfolio Holdings Inc., 1007 North Orange Street, 4th Floor, Wilmington, DE 19801. Common Stock Name of Beneficial Owner Number Of Shares Beneficially Owned Percentage of Class (1)(2) 5% Stockholders Walleye Capital LLC 2800 Niagara Lane N Plymouth, MN 55447 (3) 265,332 5.19 % Travis Elliott 2028 East Ben White Blvd., Suite 240-8228 Austin, TX 78741 (4) 308,699 6.04 % Directors and Named Executive Officers Dominic Wells, CEO, CRO, Director (Chair of Board) 1,165,500 22.81 % Esbe van Heerden (5) , President 252,000 4.93 % Yury Byalik (6) , Head of Strategy and Acquisitions 115,500 2.26 % Adam Trainor (7) Chief Operations Officer 14,280 * Rob te Braake, Chief Financial Officer 43,865 * Andrew “A.J.” Lawrence, Director 700 * David McKeegan, Director 700 * Robert J. Lipstein, Director 700 * Mark Schwartz, Director 700 * All Executive Officers and Directors as a Group (9 individuals) 1,593,945 31.2 % ——————— * Less than 1.0%. (1) Where the Number of Shares Beneficially Owned (reported in the preceding column) includes shares which may be purchased upon the exercise of outstanding stock options and warrants which are or within sixty days will become exercisable (“presently exercisable options”) the percentage of class reported in this column has been calculated assuming the exercise of such presently exercisable options. (2) Based on 5,110,195 shares of common stock outstanding on March 31, 2023. (3) Based upon a Schedule 13G filed February 15, 2023. (4) Based upon a Schedule 13D filed on November 18, 2022. (5) Ms. van Heerden was issued 252,000 restricted shares of common stock which vest over a period of three years at the rate of 1/36th beginning on August 1, 2020. She has voting rights with respect to all of her shares. (6) Mr. Byalik was issued 115,500 restricted shares of common stock which vests over a period of three years at the rate of 1/36th beginning on August 1, 2020. He has voting rights with respect to all of his shares. (7) Represents 14,280 options exercisable within 60 days from March 31, 2023. 59 Table of Contents We are not aware of any arrangements that could result in a change of control. Securities Authorized for Issuance under Equity Compensation Plans Information regarding our compensation plans under which our equity securities are authorized for issuance can be found in Part II –Item 5 of this Report on Form 10-K. Item 13. Certain Relationships and Related Transactions, and Director Independence Transactions with Related Persons On July 22, 2020, our Company issued 420,000 shares to Dominic Wells, our Company’s CEO, in exchange for 100% of the membership interest of Onfolio LLC. At the time of the transaction, Mr. Wells was the sole owner of both Onfolio LLC and the Company and as such the transaction is considered a combination of entities under common control under FASB ASC 805. Onfolio LLC owned and operated several domain names that were recognized on the Company’s balance sheet at carryover basis in accordance with ASC 805. Onfolio LLC is a Delaware limited liability company and was formed on May 14, 2019 by the sole member Dominic Wells. On August 1, 2020, our Company’s CEO assigned his entire 20% interest in Onfolio Groupbuild 1 LLC (“Groupbuild”) in exchange for no consideration. From time to time, the Company pays expenses directly on behalf of the joint ventures that it manages and receives funds on behalf of the joint ventures. As of December 31, 2022 the balances due from related parties were $54,858 included in current liabilities. During the year ended December 31, 2022, the Company paid the $215,000 related to the Company’s capital contribution for its equity interest in JV IV. From time to time, the Company’s CEO paid expenses on behalf of the Company, and the Company funded certain expenses to the CEO. Additionally, the Company received its investments in Onfolio JV I, LLC, Onfolio JV II LLC and Onfolio JV III LLC from the CEO. The Company recognized the value of its investments in these joint ventures at carryover basis based on the amount paid by the CEO to the joint venture for Onfolio JV 1 LLC, and agreed to pay the joint venture the contribution for Onfolio JV II LLC and Onfolio JV III LLC at the carryover basis for the amount the interest was acquired for by the CEO. As of December 31, 2022, the Company was owed $36,854 by the entities controlled by the Company’s CEO, and the Company owed the CEO $0 and $480 as of December 31, 2022 and 2021, respectively. For additional information, see Note 8 of our accompanying audited financial statements . Policies and Procedures for Related-Party Transactions Our Audit Committee considers and approves or disapproves any related person transaction as required by NASDAQ regulations. Director Independence Standards Applicable NASDAQ rules require a majority of a listed company’s board of directors to be comprised of independent directors. In addition, the NASDAQ rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act. Under applicable NASDAQ rules, a director will only qualify as an “independent director” if, in the opinion of the listed company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. 60 Table of Contents Director Independence In during March 2023, our Board of Directors undertook a review of the composition of our Board of Directors and its committees and the independence of each of our directors. Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our Board of Directors has determined that each of Andrew “A.J.” Lawrence, David McKeegan, Robert J. Lipstein, and Mark Schwartz are “independent directors” as defined under applicable NASDAQ Stock Market Rules and Exchange Act Rules. In making such determination, our Board of Directors considered the relationships that each such non-employee director has/had with our Company and all other facts and circumstances that our Board of Directors deemed relevant in determining his/her independence, including the beneficial ownership of our capital stock by each non-employee director. The one member of our Board of Directors who is not an “independent director” is Dominic Wells as a result of his executive officer status with our Company. Item 14. Principal Accountant Fees and Services The aggregate fees billed for professional services by BF Borgers CPA PC during 2022 and 2021 were as follows: 2022 2021 Audit Fees $ 108,900 $ 59,400 Audit-Related Fees - - Tax Fees - - All Other Fees — — Audit Fees are the aggregate fees billed during the years ended December 31, 2022 and December 31, 2021 for professional services rendered by BF Borgers CPA PC for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Form 10-Q or services that are normally provided by BF Borgers CPA PC in connection with statutory and regulatory filings or engagements. Audit-Related Fees are the aggregate fees billed during the years ended December 31, 2022 and December 31, 2021 for assurance and related services rendered by BF Borgers CPA PC that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under the category Audit Fees described above. Tax Fees are the aggregate fees billed during the years ended December 31, 2022 and December 31, 2021 for tax compliance services rendered by BF Borgers CPA PC. All Other Fees are the aggregate fees billed during the years ended December 31, 2022 and December 31, 2021 for products and services provided by BF Borgers CPA PC, other than the services reported in the Audit Fees, Audit-Related Fees, and Tax Fees categories above. Audit Committee Pre-Approval Policies . All the services performed by BF Borgers CPA PC that are described above were pre-approved by the Company’s audit committee. The Audit Committee pre-approves all audit and permissible non-audit services on a case-by-case basis. None of the hours expended on BF Borgers CPA PC’s engagement to audit the Company’s financial statements for the years ended December 31, 2022 and December 31, 2021 were attributed to work performed by persons other than BF Borgers CPA PC’s full-time, permanent employees. 61 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules (a) The following Audited Financial Statements are filed as part of this Form 10-K Report: Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets F-3 Consolidated Statements of Operations F-4 Consolidated Statements of Stockholders’ Equity F-5 Consolidated Statements of Cash Flows F-6 Notes to Consolidated Financial Statements F-7 (b) The following exhibits are filed as part of this report. Exhibit No. Description of Exhibit Location 2.1 Asset Sale and Purchase Agreement - BCP MEDIA, Inc. Incorporated by reference to our Form 8-K filed on 10/19/22) 2.2 Share Purchase Agreement - i2W Ltd) Incorporated by reference to our Form 8-K filed on 10/7/22 2.3 Asset Purchase Agreement - Hoang Huu Thinh Incorporated by reference to our Form 8-K filed on 10/7/22 2.4 Asset Purchase Agreement - Contentellect Incorporated by reference to our Form 8-K filed on 1/17/2023 3.1 Amended and Restated Certificate of Incorporation Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 3.2 Certificate of Amendment of Certificate of Incorporation Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 08/16/22 3.3 Amended and Restated Bylaws Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/26/22 4.1 Warrant Agency Agreement, dated August 30, 2022, between the Company and VStock Transfer LLC Incorporated by reference to Company’s Form 8-K filed with the SEC on 8/30/22 4.2 Form of Warrant Agreement (included in Exhibit 4.1) Incorporated by reference to Company’s Form 8-K filed with the SEC on 8/30/2022 4.3 Form of Representative’s Warrant Incorporated by reference to Company’s Form 8-K filed with the SEC on 7/25/22 4.4 Warrant - BCP MEDIA, Inc. Incorporated by reference to our Form 8-K filed on 10/19/22 4.5 Form of Stock Certificate Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 5/13/22 4.6 Description of Registrant’s Securities Filed Herewith 10.1 2020 Equity Incentive Plan Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 9/20/22 10.2 2020 Equity Incentive Plan Amendment No 1 Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 8/16/22 10.3 Form of Non-Qualified Stock Option Agreement – Employees Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 10.4 Form of Stock Option Exercise Agreement - Employees Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 62 Table of Contents 10.5 Form of Non-Qualified Stock Option Award Agreement - Consultants Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 10.6 Form of Stock Option Exercise Agreement - Consultants Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 10.7 Form of Non-Qualified Stock Option Award Agreement - Non Employee Directors Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 10.8 Form of Stock Option Exercise Agreement - Non Employee Directors Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 10.9 Form of Restricted Stock Award Agreement - Directors Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 10.10 Nonemployee Director Compensation Policy 2022 Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 10.11 Employment Agreement dated as of August 1, 2020, by the Company and Dominic Wells Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 10.12 Employment Agreement dated as of January 1, 2022 by the Company and Dominic Wells Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 10.13 Employment Agreement dated as of February 1, 2022, by the Company and Esbe van Heerden Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 10.14 Employment Agreement dated as of September 1, 2021, by the Company and Yury Byalik Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 10.15 Employment Agreement dated as of February 1, 2022, by the Company and Adam Trainor Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 10.16 Employment Agreement dated as of March 7, 2022, by the Company and Jack W. Hawkins III Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 10.17 Employment Agreement dated as of January 1, 2023, by the Company and Robert te Braake Incorporated by reference to Company’s Form 8-K filed with the SEC on 12/20/2022 10.18 Form of Director and Officer Indemnification Agreement Agreement Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 04/07/22 14.1 Code of Ethics and Business Conduct Incorporated by reference to Company’s Form S-1 Registration Statement filed with the SEC on 5/13/22 21.1 Subsidiaries of the Registrant Filed herewith 22.1 List of issuer and guarantor subsidiaries Filed herewith 31.1 Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, executed by the Principal Executive Officer of the Company. Filed herewith 31.2 Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, executed by the Principal Financial Officer of the Company. Filed herewith 32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Principal Executive Officer of the Company. Filed herewith 32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Principal Financial Officer of the Company. Filed herewith 101.INS Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) Item 16. Form 10-K Summary None 63 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ONFOLIO HOLDINGS INC. Registrant By: /s/ Dominic Wells Dominic Wells, Chief Executive Officer (Principal Executive Officer) Date: April 12, 2023 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Dominic Wells Chief Executive Officer, Principal Executive Officer, Chair of the Board of Directors April 12, 2023 Dominic Wells /s/ Rob te Braake Interim Chief Financial Officer, Principal Financial Officer April 12, 2023 Rob te Braake /s/ Andrew Lawrence Director April 12, 2023 Andrew Lawrence /s/ David McKeegan Director April 12, 2023 David McKeegan /s/ Robert J. Lipstein Director April 12, 2023 Robert J. Lipstein /s/ Mark N. Schwartz Director April 12, 2023 Mark N. Schwartz 64 Table of Contents FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets F-3 Consolidated Statements of Operations F-4 Consolidated Statements of Stockholders’ Equity F-5 Consolidated Statements of Cash Flows F-6 Notes to Consolidated Financial Statements F-7 F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the shareholders and the board of directors of Onfolio Holdings, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Onfolio Holdings, Inc. as of December 31, 2022 and 2021, 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 December 31, 2022 and 2021, 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. Substantial Doubt about the Company’s Ability to Continue as a Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. 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 (PCOAB ID 5041 ) We have served as the Company’s auditor since 2021 Lakewood, CO April 11, 2023 F-2 Table of Contents Onfolio Holdings, Inc. Consolidated Balance Sheets December 31 December 31 2022 2021 Assets Current Assets: Cash $ 6,701,122 $ 1,710,318 Accounts receivable, net 137,598 14,624 Inventory 105,129 98,397 Prepaids and other current assets 212,180 159,791 Total Current Assets 7,156,029 1,983,130 Intangible assets 3,864,618 1,388,260 Goodwill 4,209,126 - Due from related party 111,720 51,095 Investment in unconsolidated joint ventures, cost method 154,007 138,401 Investment in unconsolidated joint ventures, equity method 280,326 279,382 Total Assets $ 15,775,826 $ 3,840,268 Liabilities and Stockholders Equity Current Liabilities: Accounts payable and other current liabilities $ 550,454 $ 222,543 Dividends payable 54,404 1,498 Due to joint ventures - 9,105 Acquisition notes payable 2,456,323 17,323 Notes payable 68,959 28,514 Due to related parties - 480 Contingent consideration 60,000 - Deferred revenue 113,251 32,000 Total Current Liabilities 3,303,391 311,463 Due to joint ventures - long term - 155,000 Total Liabilities 3,303,391 466,463 Commitments and Contingencies Stockholders' Equity: Preferred stock, $ 0.001 per value, 5,000,000 shares authorized Series A Preferred stock, $ 0.001 par value, 1,000,000 shares authorized, 69,660 and 56,800 issued and outstanding at September 30, 2022 and December 31, 2021, respectively 70 57 Common stock, $ 0.001 par value, 50,000,000 shares authorized, 5,110,195 and 2,353,645 issued and outstanding at December 31, 2022 and December 31, 2021, respectively 5,110 2,354 Additional paid-in capital 19,950,774 6,522,382 Accumulated other comprehensive income 96,971 - Accumulated deficit ( 7,580,490 ) ( 3,150,988 ) Total Stockholders' Equity 12,472,435 3,373,805 Total Liabilities and Stockholders' Equity $ 15,775,826 $ 3,840,268 The accompanying notes are an integral part of these consolidated financial statements F-3 Table of Contents Onfolio Holdings, Inc. Consolidated Statements of Operations For the Year Ended December 31, 2022 2021 Revenue, services $ 544,822 $ 507,532 Revenue, product sales 1,674,993 1,301,011 Total Revenue 2,219,815 1,808,543 Cost of revenue, services 356,957 447,325 Cost of revenue, product sales 664,405 626,185 Total cost of revenue 1,021,362 1,073,510 Gross profit 1,198,453 735,033 Operating expenses Selling, general and administrative 4,271,865 2,479,152 Professional fees 509,941 208,193 Acquisition costs 527,792 - Total operating expenses 5,309,598 2,687,345 Loss from operations ( 4,111,145 ) ( 1,952,312 ) Other income (expense) Equity method income 34,432 50,684 Dividend income 3,193 9,970 Interest income (expense), net ( 2,152 ) ( 9,805 ) Other income 13,223 - Impairment of investments ( 137,602 ) - Loss on sale of asset ( 34,306 ) - Total other income ( 123,212 ) 50,849 Loss before income taxes ( 4,234,357 ) ( 1,901,463 ) Income tax (provision) benefit - 1,314 Net loss ( 4,234,357 ) ( 1,900,149 ) Preferred Dividends ( 195,145 ) ( 106,825 ) Net loss to common shareholders $ ( 4,429,502 ) $ ( 2,006,974 ) Net loss per common shareholder Basic and diluted $ ( 1.35 ) $ ( 0.96 ) Weighted average shares outstanding Basic and diluted 3,285,934 2,080,733 The accompanying notes are an integral part of these consolidated financial statements F-4 Table of Contents Onfolio Holdings, Inc. Consolidated Statements of Stockholders' Equity For the Years Ended December 31, 2022 and 2021 Preferred Stock, $0.001 Par value Common Stock, $0.001 Par Value Additional Paid-In Accumulated Accumulated Other Comprehensive Stockholders' Shares Amount Shares Amount Capital Deficit Income Equity Balance, December 31, 2020 - $ - 2,015,546 $ 2,016 $ 2,329,747 $ ( 1,144,015 ) $ - $ 1,187,748 Preferred Shares for cash 56,800 57 - - 1,414,943 - - 1,415,000 Common stock sold for cash - - 338,100 338 2,009,662 - - 2,010,000 Stock-based compensation - - - - 768,030 - - 768,030 Preferred dividends - - - - - ( 106,825 ) - ( 106,825 ) Net loss - - - - - ( 1,900,148 ) - ( 1,900,148 ) Balance, December 31, 2021 56,800 57 2,353,646 2,354 6,522,382 ( 3,150,988 ) - 3,373,805 Preferred Shares for cash 12,860 13 - - 321,487 - - 321,500 Common stock sold for cash - - 2,753,750 2,754 12,101,913 - - 12,104,667 Stock-based compensation - - 2,800 2 944,993 - - 944,995 Warrants issued for acquisition - - - - 60,000 - - 60,000 Preferred dividends - - - - - ( 195,145 ) - ( 195,145 ) Foreign currency translation - - - - - - 96,971 96,971 Net loss - - - - - ( 4,234,357 ) - ( 4,234,357 ) Balance, December 31, 2022 69,660 $ 70 5,110,196 $ 5,110 $ 19,950,774 $ ( 7,580,490 ) $ 96,971 $ 12,472,435 The accompanying notes are an integral part of these consolidated financial statements F-5 Table of Contents Onfolio Holdings, Inc. Consolidated Statements of Cash Flows For the Years Ended December 31, 2022 and 2021 2022 2021 Cash Flows from Operating Activities Net loss ( 4,234,357 ) $ ( 1,900,148 ) Adjustments to reconcile net loss to net cash provided by operating activities: Deferred tax expense (benefit) - ( 1,314 ) Stock-based compensation expense 944,995 768,030 Equity method income ( 34,432 ) ( 50,684 ) Dividends received from equity method investment 33,488 63,798 Impairment of Cost method investment 51,894 - Loss on sale of asset 34,306 - Amortization of intangible assets 124,832 - Net change in: Accounts receivable ( 122,974 ) 39,277 Inventory 8,125 ( 58,806 ) Prepaids and other current assets ( 52,389 ) ( 142,110 ) Accounts payable and other current liabilities 325,706 185,651 Due to joint ventures ( 9,730 ) ( 7,532 ) Deferred revenue 60,123 3,000 Due to related parties ( 480 ) ( 39,643 ) Net cash used in operating activities ( 2,870,893 ) ( 1,140,481 ) Cash Flows from Investing Activities Proceeds from sale of intangible assets 45,694 75,000 Purchase of intangible assets - ( 784,000 ) Cash paid to acquire businesses ( 4,261,413 ) - Advances to related parties - ( 9,526 ) Investments in joint ventures ( 67,500 ) ( 49,401 ) Net cash used in investing activities ( 4,283,219 ) ( 767,927 ) Cash Flows from Financing Activities Proceeds from sale of common stock 12,104,667 2,010,000 Proceeds from sale of Series A preferred stock 321,500 1,415,000 Payments of preferred dividends ( 142,239 ) ( 105,327 ) Payment of contribution to joint venture note payable ( 215,000 ) ( 60,000 ) Payments on acquisition note payable - ( 191,170 ) Proceeds from notes payable 44,000 108,000 Payments on note payables ( 3,555 ) ( 79,486 ) Net cash provided by financing activities 12,109,373 3,097,017 Effect of foreign currency translation 35,543 - Net Change in Cash 4,990,804 1,188,609 Cash, Beginning of Period 1,710,318 521,709 Cash, End of Period $ 6,701,122 $ 1,710,318 Cash Paid For: Income Taxes $ - $ - Interest $ 7,082 $ 9,805 Non-cash transactions: Notes payable issued for asset acquisitions $ 2,439,000 $ - The accompanying notes are an integral part of these consolidated financial statements F-6 Table of Contents ONFOLIO HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 NOTE 1 – NATURE OF BUSINESS AND ORGANIZATION Onfolio Holdings, Inc. (“Company”) was incorporated on July 20, 2020 under the laws of Delaware to acquire and develop high-growth and profitable internet businesses. The Company primarily earns revenue through website management, digital services, advertising and content placement on its websites, and product sales on certain sites. The Company owns multiple websites and manages websites on behalf of certain unconsolidated entities in which it holds equity interests. On July 22, 2020, the Company issued 2,000,000 shares to Dominic Wells, the Company’s CEO in exchange for 100% of the membership interest of Onfolio LLC . At the time of the transaction, Dominic Wells was the sole owner of both Onfolio LLC and the Company and as such the transaction was considered a combination of entities under common control under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805. Onfolio LLC owned and operated several domain names that were recognized on the Company’s balance sheet at carryover basis in accordance with ASC 805. The results of operations and cash flows of Onfolio LLC are included in the Company’s consolidated financial statements since the incorporation date of Onfolio LLC in 2019. Onfolio LLC is a Delaware LLC and was formed on May 14, 2019 by the sole member Dominic Wells. On December 2, 2020, the Company created a wholly-owned subsidiary, Vital Reaction, LLC in the state of Delaware. On April 7, 2021 and September 6, 2021, the Company created wholly-owned subsidiaries, Mighty Deals LLC and Onfolio Crafts LLC, respectively, in the state of Delaware. On November 15, 2021, the Company created a wholly-owned subsidiary, Onfolio Assets, LLC in the state of Delaware. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Consolidation The accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). The Company’s fiscal year end is December 31. The consolidated financial statements of the Company include the accounts of its wholly owned subsidiaries and other controlled entities. The Company’s wholly-owned subsidiaries are Onfolio LLC, Vital Reaction, LLC, Mighty Deals LLC, Onfolio Assets, LLC, SEO Butler Limited and Onfolio Crafts LLC. All intercompany transactions and balances have been eliminated in consolidation. Foreign Currency Translation Gains (Losses) The Company, and its subsidiaries Onfolio LLC, Vital Reaction, LLC, Mighty Deals LLC, Onfolio Assets, LLC, and Onfolio Crafts LLC, maintain their accounting records in U.S. Dollars. The Company’s operating subsidiary, SEO Butler, is located in the United Kingdom and maintains its accounting records in Great Britain Pounds, which is its functional currency. Assets and liabilities of the subsidiary 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. Investment in Unconsolidated Entities – Equity and Cost Method Investments We account for our interests in entities in which we are able to exercise significant influence over operating and financial policies, generally 50 % or less ownership interest, under the equity method of accounting. In such cases, our original investments are recorded at cost and adjusted for our share of earnings, losses and distributions. We account for our interests in entities where we have virtually no influence over operating and financial policies under the cost method of accounting. In such cases, our original investments are recorded at cost and any distributions received are recorded as income. Our investments in OnFolio JV I, LLC (“JV I”), OnFolio JV II, LLC (“JV II”) and OnFolio JV III, LLC (“JV III”) are accounted for under the cost method. All investments are subject to our impairment review policy. F-7 Table of Contents The current investment in unconsolidated affiliates accounted for under the equity method consists of a 35.8 % interest in OnFolio JV IV, LLC (“JV IV”), which is involved in the acquisition, development and operation of websites to produce adverting revenue. Variable Interest Entities Variable interest entities (“VIEs”) are consolidated when the investor is the primary beneficiary. A primary beneficiary is the variable interest holder in a VIE with both the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and the obligation to absorb losses, or the right to receive benefits that could potentially be significant to the VIE. Management concluded that the joint ventures do not qualify as variable interest entities under the requirements of ASC 810. The Company accounts for its investments in the joint ventures under either the cost or equity method based on the equity ownership in each entity. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the balance sheet. The Company uses significant judgements when making estimates related to the assessment of control over variable interest entities, valuation of deferred tax assets and impairment of long lived assets. Actual results could differ from those estimates. Cash and Cash Equivalent Cash and cash equivalents include cash on hand, demand deposits with banks and liquid investments with an original maturity of three months or less. Inventories Inventories are stated at the lower of actual cost or net realizable value. Cost is determined by using the first-in, first-out (FIFO) method. Long-lived Assets The Company amortizes acquired definite-lived intangible assets over their estimated useful lives. Other indefinite-lived intangible assets are not amortized but subject to annual impairment tests. In accordance with ASC 360 “Property Plant and Equipment,” the Company reviews the carrying value of intangibles subject to amortization and long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any, exceeds its fair market value. Revenue Recognition The Company follows the guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (the “new revenue standard”) to all contracts using the modified retrospective method. Revenue is recognized based on the following five step model: - Identification of the contract with a customer - Identification of the performance obligations in the contract - Determination of the transaction price - Allocation of the transaction price to the performance obligations in the contract - Recognition of revenue when, or as, the Company satisfies a performance obligation F-8 Table of Contents The Company primarily earns revenue through website management, digital services, advertising and content placement on its websites, product sales, and digital product sales. Management services revenue is earned and recognized on a monthly basis as the services are provided. Advertising and content revenue is earned and recognized once the content is presented on the Company’s sites in accordance with the customer requirements. Product sales are recognized at the time the product is shipped to the customer. In certain circumstances, products are shipped directly by a supplier to the end customer at the Company’s request. The Company determined that it is the primary obligor in these contracts due to being responsible for fulfilling the customer contract, establishing pricing with the customer, and taking on credit risk from the customer. The Company recognizes revenue from these contracts with customers on a gross basis. Digital product sales represent electronic content that is transferred to the customer at time of purchase. The Company also earns revenue from online course subscriptions that may have monthly or annual subscriptions. In circumstances when a customer purchases an annual subscription upfront, the Company defers the revenue until the performance obligation has been satisfied. As of December 31, 2022, the Company has $ 48,037 in deferred revenue related to unsatisfied performance obligations that are expected to be recognized during fiscal 2023. The following table presented disaggregated revenue information for the years ended December 31, 2022 and 2021: For the Year ended December 31, 2022 For the Year ended December 31, 2021 Website management $ 296,211 $ 304,587 Advertising and content revenue 248,611 204,910 Product sales 609,776 661,154 Digital Product Sales 1,065,217 636,192 Other - 1,700 Total revenue $ 2,219,815 $ 1,808,543 The Company does not have any single customer that accounted for greater than 10 % of revenue during the years ended December 31, 2022 and 2021. Cost of Revenue Cost of product revenue consists primarily of costs associated with the acquisition and shipment of products being sold through the Company’s online marketplaces, and the costs of its service revenue, which include website content creation costs including contract labor, domain and hosting costs and certain software costs related to website operations. Cost of Service revenue consists primarily of costs associated with the acquisition and shipment of products being sold through the Company’s online marketplaces, and the costs of its service revenue, which include website content creation costs including contract labor, domain and hosting costs and certain software costs related to website operations. Net Income (Loss) Per Share In accordance with ASC 260 “Earnings per Share,” basic net loss per common share is computed by dividing net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of common and common equivalent shares, such as stock options and warrants, outstanding during the period. Such common equivalent shares have not been included in the computation of net loss per share as their effect would be anti-dilutive. Income Taxes The Company accounts for income taxes in accordance with ASC 740, which requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. F-9 Table of Contents Tax benefits of uncertain tax positions are recorded only where the position is “more likely than not” to be sustained based on their technical merits. The amount recognized is the amount that represents the largest amount of tax benefit that is greater than 50 % likely of being ultimately realized. A liability is recognized for any benefit claimed or expected to be claimed, in a tax return in excess of the benefit recorded in the financial statements, along with any interest and penalty (if applicable) in such excess. The Company has no uncertain tax positions as of December 31, 2022 or 2021. Fair Value of Financial Instruments The carrying value of short-term instruments, including cash, accounts payable and accrued expenses, and notes payable approximate fair value due to the relatively short period to maturity for these instruments. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a three-level valuation hierarchy for disclosures of fair value measurements, defined as follows: Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value. The Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis. Stock-Based Compensation Accounting Standards Codification (“ASC”) 718, “Accounting for Stock-Based Compensation” established financial accounting and reporting standards for stock-based compensation plans. It defines a fair value-based method of accounting for an employee stock option or similar equity instrument. Accordingly, employee share-based payment compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. The valuation of employee stock options is an inherently subjective process, since market values are generally not available for long-term, non-transferable employee stock options. Accordingly, the Black-Scholes option pricing model is utilized to derive an estimated fair value. The Black-Scholes pricing model requires the consideration of the following six variables for purposes of estimating fair value: Expected Dividends. We have never declared or paid any cash dividends on any of our capital stock and do not expect to do so in the foreseeable future. Accordingly, we use an expected dividend yield of zero to calculate the grant-date fair value of a stock option. Expected Volatility. The expected volatility is a measure of the amount by which our stock price is expected to fluctuate during the expected term of options granted. We determine the expected volatility solely based upon the historical volatility of a peer group of companies of similar size and with similar operations. Risk-Free Interest Rate. The risk-free interest rate is the implied yield available on U.S. Treasury zero -coupon issues with a remaining term equal to the option’s expected term on the grant date. Expected Term. The expected life of stock options granted is based on the actual vesting date and the end of the contractual term. Stock Option Exercise Price and Grant Date Price of Common Stock. Currently the Company utilizes the most recent cash sale price of its common stock as the most reasonable indication of fair value. F-10 Table of Contents The Company accounts for compensation cost for stock option plans and for share based payments to non-employees in accordance with ASC 505, “Accounting for Equity Instruments Issued to Non-Employees for Acquiring, or in Conjunction with Selling, Goods or Services”. Share-based awards to non-employees are expensed over the period in which the related services are rendered at their fair value. Recent Accounting Pronouncements The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on Company’s results of operations, financial position or cash flow. NOTE 3 – GOING CONCERN These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At December 31, 2022 the Company had not yet achieved consistent profitable operations and expects to incur further losses in the development of its business, all of which raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity or debt financing and/or related party advances. However there is no assurance of additional funding being available. NOTE 4 – BUSINESS ACQUISITIONS 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”) (the “SEO Butler Acquisition”). Seller is the owner of the legal and beneficial title to the Sale Shares of SEO Butler, which operates as a productized 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. The acquisition of SEO Butler is being accounted for as a business combination under ASC 805. The Company is continuing to gather evidence to evaluate what identifiable intangible assets were acquired, such as a customer list, and the fair value of each, and expects to finalize the fair value of the acquired assets within one year of the acquisition date. The aggregate preliminary fair value of consideration for the SEO Butler Acquisition was as follows: Schedule of preliminary Fair value Acquisition Amount Cash paid to seller 950,000 Total preliminary consideration transferred $ 950,000 F-11 Table of Contents The following information summarizes the preliminary allocation of the fair values assigned to the assets acquired at the acquisition date: Schedule Of Recognized Identified Assets Acquired And Liabilities Cash Acquired $ 38,587 Other Current assets 14,858 Website domains 70,000 Customer relationships 322,000 Trademarks and Trade Names 90,000 Non-Compete agreement 30,000 Goodwill 407,888 Accounts payable and other accrued liabilities ( 2,205 ) Deferred revenue ( 21,128 ) Net assets acquired $ 950,000 From the period of acquisition of SEO Butler through December 31, 2022, the Company generated total revenue and net income of $ 144,785 and $ 52,727 , respectively. 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 acquisition of BCP Media assets is being accounted for as a business combination under ASC 805. The Company is continuing to gather evidence to evaluate what identifiable intangible assets were acquired, such as a customer list, and the fair value of each, and expects to finalize the fair value of the acquired assets within one year of the acquisition date. The aggregate preliminary fair value of consideration for the BCP Media acquisition was as follows: Schedule of preliminary Fair value Acquisition Amount Cash paid to seller 2,100,000 Notes payable issued to seller 2,399,000 Warrants to purchase common shares issued to seller 60,000 Total preliminary consideration transferred $ 4,559,000 F-12 Table of Contents The following information summarizes the preliminary allocation of the fair values assigned to the assets acquired at the acquisition date: Schedule Of Recognized Identified Assets Acquired And Liabilities Website domains $ 220,000 Customer relationships 813,000 Trademarks and Trade Names 330,000 Non-Compete agreement 80,000 Goodwill 3,116,000 Net assets acquired $ 4,559,000 From the period of acquisition of BCP Media through December 31, 2022, the Company generated total revenue and net income of $ 681,413 and $ 167,253 , respectively. BWPS Acquisition On October 3, 2022, the Company entered into an Asset Purchase Agreement (“Asset Purchase Agreement”) with Hoang Huu Thinh, an individual (“ Hoang”). Pursuant to the Asset Purchase Agreement, the Company will purchase from Hoang, substantially all of the Seller’s assets utilized in the operation of the business of providing a suite of optimization, customization, privacy and security products and services for WordPress websites (“WordPress Websites Business”), with the core Business offerings consisting of (i) the WordPress plugin known as PREVENT DIRECT ACCESS available via the website preventdirectaccess.com, and (ii) the WordPress plugin known as PASSWORD PROTECT WORDPRESS available via the website passwordprotectwp.com. Pursuant to the Asset Purchase Agreement, and subject to the terms and conditions contained therein, at the closing, Hoang agreed to sell to Onfolio, LLC the WordPress Websites Business, all as more fully described in the Asset Purchase Agreement. The aggregate purchase price for the WordPress Websites Business is as follows: (i) $ 1,250,000 paid in cash at the closing and $ 4,000,000 paid via a promissory note to be made by Onfolio, LLC payable to Hoang after the performance of certain obligations by Hoang and others as provided for in the Asset Purchase Agreement; and (ii) up to $ 60,000 in cash pursuant to the earn-out provisions of the Asset Purchase Agreement. The transaction closed on October 25, 2022. The acquisition of BWPS assets is being accounted for as a business combination under ASC 805. The Company is continuing to gather evidence to evaluate what identifiable intangible assets were acquired, such as a customer list, and the fair value of each, and expects to finalize the fair value of the acquired assets within one year of the acquisition date. The aggregate preliminary fair value of consideration for the BWPS acquisition was as follows: Schedule of preliminary Fair value Acquisition Amount Cash paid to seller 1,250,000 Notes payable issued to seller 40,000 Contingent liability for earn-out provision 60,000 Total preliminary consideration transferred $ 1,350,000 The following information summarizes the preliminary allocation of the fair values assigned to the assets acquired at the acquisition date: Schedule Of Recognized Identified Assets Acquired And Liabilities Website domains $ 130,000 Customer relationships 482,000 Trademarks and Trade Names 50,000 Non-Compete agreement 30,000 Goodwill 658,000 Net assets acquired $ 1,350,000 From the period of acquisition of BWPS through December 31, 2022, the Company generated total revenue and net loss of $ 18,622 and $ 15,632 , respectively. F-13 Table of Contents Unaudited Pro Forma Financial Information The following table sets forth the pro-forma consolidated results of operations for the year ended December 31, 2022 and 2021 as if the BCP Media, BWPS, and SEO Butler acquisitions occurred on January 1, 2021. The pro forma results of operations are presented for informational purposes only and are not indicative of the results of operations that would have been achieved if the acquisitions had taken place on the dates noted above, or of results that may occur in the future. Year ended December 31, 2022 2021 Revenue $ 5,469,361 $ 6,291,649 Operating loss ( 3,029,332 ) ( 1,485,459 ) Net loss ( 3,165,942 ) ( 1,278,558 ) Net loss per common share $ ( 0.96 ) $ ( 0.05 ) Weighted Average common shares outstanding 3,285,934 2,080,733 NOTE 5 – INVESTMENTS IN JOINT VENTURES The Company holds various investments in certain joint ventures as described below. Cost method investments OnFolio JV I, LLC (“JV I”) was formed on October 11, 2019 under the laws of Delaware. OnFolio LLC is the managing member of JV I and has operational and financial decision making. The manager of JV 1 can be removed by a majority vote of the equity holders of JV I. On August 1, 2020, the Company received an investment of 2.72 % by assignment from Dominic Wells, the Company’s CEO, who invested $ 10,000 into JV I for the equity interest.. As manager of JV I, the Company will receive a monthly management fee of $2,500, and 50% of net profits of JV I above the monthly minimum of $12,500. In the event of the sale of a website that JV I manages, the Company will received 50% of the excess of the sales price above the price paid for the site . During the year ended December 31, 2022, the Company purchased an additional 10.91 % interest from existing owners for $ 52,500 in cash, bringing its total equity interest to 13.65 %. OnFolio JV II, LLC (“JV II”) was formed on November 8, 2019 under the laws of Delaware. OnFolio LLC is the managing member of JV II and has operational and financial decision making. The manager of JV II can be removed by a majority vote of the equity holders of JV II. On August 1, 2020, the Company received an investment of approximately 2.14 % by assignment from Dominic Wells, the Company’s CEO, who invested $ 10,000 into JV II for the equity interest.. Additionally, during the year ending December 31, 2020 the CEO acquired an additional interest from an existing JV II investor and transferred it to the Company, bringing its total equity interest in JV II to 4.28 %. During the year ending December 31, 2021, the company acquired additional interest from an existing JV II investor by paying $ 9,400 for his 2.14 %, bringing its total equity interest in JV II to 6.42 %. As manager of JV II, the Company will receive a monthly management fee of $1,500, and 50% of net profits of JV II above the monthly minimum of $16,500. In the event of the sale of a website that JV II manages, the Company will receive 50% of the excess of the sales price above the price paid for the site . During the year ended December 31, 2022, the Company purchased an additional 4.28 % interest from an existing owner for $ 10,000 in cash, bringing its total equity interest to 10.70 %. Based on the cash purchase price of the additional interest, the Company determined there was an implied impairment in the amount of $ 14,401 related to the cost basis of JV II. The management fee to the Company described above was waived for fiscal year ended December 31, 2022 due to lower operating results of JV II. OnFolio JV III, LLC (“JV III”) was formed on January 3, 2020 under the laws of Delaware. OnFolio LLC is the managing member of JV III and has operational and financial decision making. The manager of JV 1 can be removed by a majority vote of the equity holders of JV III. On August 1, 2020, the Company received an investment of approximately 1.94 % by assignment from Dominic Wells, the Company’s CEO, who invested $ 10,000 into JV I for the equity interest. The $ 10,000 owed by the Company is included in Due to related parties on the consolidated balance sheet as of December 31, 2020. During the year ending December 31, 2021, the company acquired additional interests from existing JV II investors by paying $ 40,000 for 7.7652%, bringing its total equity interest in JV III to 9.7052%. As manager of JV III, the Company will receive a monthly management fee of $3,000, and 50% of net profits of JV III above the monthly minimum of $16,500. In the event of the sale of a website that JV III manages, the Company will receive 50% of the excess of the sales price above the price paid for the site . During the year ended December 31, 2022, the Company purchased an additional 3.88 % interest from an existing owner for $ 5,000 in cash, bringing its total equity interest to 13.59 %. Based on the cash purchase price of the additional interest, the Company determined there was an impairment in the amount of $ 37,493 related to the cost basis of JV III. The management fee to the Company described above was reduced to $ 500 for fiscal year ended December 31, 2022 due to lower operating results of JV III. F-14 Table of Contents OnFolio Groupbuild 1 LLC (“Groupbuild”) was formed on April 22, 2020 under the laws of Delaware. The Company, as manager, is entitled to 20% of the profits of Groupbuild, and an annual management fee of $15,000. The Company was assigned a 20% interest in Groupbuild by the Company’s CEO on August 1, 2020 . Equity Method Investments OnFolio JV IV, LLC (“JV IV”) was formed on January 3, 2020 under the laws of Delaware. The Company holds an equity interest of 35.8 % in JV IV, and is the manager of JV IV. The Company acquired this interest on August 1, 2020 for $ 290,000 through issuance of a Note payable to the joint venture. The Company paid $ 215,000 and $ 60,000 during the years ended December 31, 2022 and 2021 and owed a total of $ 0 and $ 215,000 as of December 31, 2022 and 2020. The manager of JV IV can be removed by a majority vote of the equity holders of JV IV. The balance sheet of JV IV at December 31, 2022 included total assets of $ 855,442 and total liabilities of $ 4,130 . Additionally, the income statement for JV IV for the years ended December 31, 2022 and 2021 included the following: For the Year ended December 31, 2022 For the Year ended December 31, 2021 Revenue $ 107,282 $ 153,742 Net Income $ 92,513 $ 143,405 The Company recognized equity method income of $ 34,432 and $50,684 during the years ended December 31, 2022 and 2021, and received dividends from JV IV of $ 33,488 and $ 63,798 , which were accounted for as returns on investment. NOTE 6 – INTANGIBLE ASSETS The following table represents the balances of intangible assets as of December 31, 2022 and 2021 Estimated life December 31, 2022 December 31, 2021 Website Domains Indefinite $ 1,308,260 $ 1,388,260 Website Domains 4 years 424,674 - Customer relationships 4 - 6 years 1,638,502 - Trademarks and Tradenames 10 years 476,010 - Non-compete agreements 3 years 142,004 - 3,989,450 1,388,260 Accumulated Amortization - Website domains ( 23,834 ) - Accumulated Amortization - Customer Relationships ( 78,514 ) - Accumulated Amortization - Trademarks / Tradenames ( 11,484 ) - Accumulated Amortization - Non-Compete ( 11,000 ) - Net Intangible $ 3,864,618 $ 1,388,260 On January 6, 2021, the Company acquired an additional domain name and related intellectual property for a purchase price of $ 700,000 , which was paid in cash through March 1, 2021 and recognized an as indefinite lived intangible asset. The Company also paid $ 42,000 as a finders fee. Management evaluated the transaction under ASC 805 and determined it was an asset acquisition, as substantially all of the fair value of assets acquired was concentrated in a group of similar assets, being the domain names and related intellectual property to operate those domains. On April 13, 2021, the Company sold one its domain sites and related intellectual property for a purchase price of $ 75,000 , with no gain or loss on the disposal. On August 25, 2021, the Company acquired an additional domain name and related intellectual property for a purchase price of $ 84,000 , recognized an as indefinite lived intangible asset. Management evaluated the transaction under ASC 805 and determined it was an asset acquisition, as substantially all of the fair value of assets acquired was concentrated in a group of similar assets, being the domain names and related intellectual property to operate those domains. F-15 Table of Contents On May 2, 2022 the Company sold one its domain sites and related intellectual property for a purchase price of $ 45,694 , and recognized a loss of $ 34,306 on the disposal. The Company also paid $ 7,392 in fees related to the transaction. On October 13, 2022, the Company closed on its acquisition of the SEO Butler Acquisition. As part of the acquisition, the Company acquired assets related to the websites operated by SEO Butler. Pursuant to the purchase price allocation as further described in Note 4, the Company allocated $ 512,000 , which is to be amortized over the estimated life of the assets ranging from 3 - 10 years. On October 14, 2022, the Company closed on its acquisition of the BCP Media Acquisition. As part of the acquisition, the Company acquired assets related to the Proofreading Business. Pursuant to the purchase price allocation as further described in Note 4, the Company allocated $ 1,443,000 , which is to be amortized over the estimated life of the assets ranging from 3 - 10 years. On October 25, 2022, the Company closed on its acquisition of the Hoang Acquisition. As part of the acquisition, the Company acquired assets related to Wordpress Plugins. Pursuant to the purchase price allocation as further described in Note 4, the Company allocated $ 692,000 , which is to be amortized over the estimated life of the assets ranging from 3 - 10 years. The following is an amortization analysis of the annual amortization of intangible assets on a fiscal year basis as of December 31, 2022: Schedule of Future Minimum Annual Lease Commitments Under Operating Leases For the year ended December 31, Schedule Of Recognized Identified Assets Acquired And Liabilities Amount 2023 $ 541,938 2024 541,938 2025 530,937 2026 419,957 2027 185,185 Thereafter 336,403 Total remaining intangibles amortization 2,556,358 NOTE 7 – STOCKHOLDERS’ DEFICIT Preferred stock The Company’s authorized preferred stock consists of 5,000,000 shares of preferred stock, with a par value of $ 0.001 per share. On November 20, 2020, the Company designated 1,000,000 shares of Series A Preferred Stock (“Series A”). The Series A has a liquidation preference to all other securities, a liquidation value of $25 per share, receives cumulative dividends payable in cash of 12% per year, payable monthly. The Series A does not have voting rights, except that the Company may not: 1) create any additional class or series of stock, nor any security convertible into stock of the Company; 2) modify the Series A designation; 3) initiate and dividend outside of without approval of at least two-thirds of the holders of the Series A. The Company has the right, but not obligation to redeem the Series A beginning January 1, 2026, at the liquidation value per share plus any unpaid dividends. During the year ended December 31, 2022, the company issued 12,860 Series A Preferred Stock in exchange for $ 321,500 of cash proceeds. During the year ended December 31, 2021, the company issued 56,600 Series A Preferred Stock in exchange for $ 1,415,000 of cash proceeds. During the year ended December 31, 2022 and 2021, the company recognized $ 195,145 and $ 106,825 in dividends to the Series A shareholders, and made cash dividend payments of $ 142,239 and $ 105,327 . As of December 31, 2022 and 2021, the company has remaining unpaid dividends of $ 54,404 and $ 1,498 . As of December 31, 2022, there were 69,660 Series A preferred shares outstanding. F-16 Table of Contents Common stock The Company’s authorized common stock consists of 50,000,000 shares of common stock, with a par value of $ 0.001 per share. All shares of common stock have equal voting rights and, when validly issued and outstanding, are entitled to one non-cumulative vote per share in all matters to be voted upon by shareholders. The shares of common stock have no pre-emptive, subscription, conversion or redemption rights and may be issued only as fully paid and non-assessable shares. Holders of the common stock are entitled to equal ratable rights to dividends and distributions with respect to the common stock, as may be declared by the Board of Directors out of funds legally available. On August 25, 2022, the “Company entered into an underwriting agreement with EF Hutton, division of Benchmark Investments, LLC (the “underwriter”), relating to the Company’s initial public offering of units (the “Units”) pursuant to the Company’s registration statement on Form S-1 (File No. 333-264191) , under the Securities Act of 1933, as amended (the “Securities Act”). Pursuant to the underwriting agreement, the Company sold 2,753,750 units at a public offering price of $5.00 per unit, with each unit consisting of one share of common stock, par value $0.001 per share , and two warrants, with each warrant exercisable to purchase one share of common stock, at an exercise price of $5.00 per share. The warrants have the rights as set forth under a warrant agency agreement. The shares of common stock and the warrants were immediately separable and were issued separately. The Company also granted the underwriter a 45-day over-allotment option, if any, to purchase up to a) 413,063 additional shares of common stock, and/or b) 826,126 additional warrants, equivalent to 15 % of the shares of common stock and warrants sold in the offering. On August 29, 2022, the underwriter partially exercised this option and purchased 609,750 additional warrants at the purchase price of $.01 per warrant for aggregate gross proceeds of $6,097.50 . The Company also issued the underwriter a warrant to purchase 82,613 shares of the Company’s common stock at an exercise price of $ 5.50 , which is 110 % of the initial public offering price. The underwriter’s warrant may be exercised in whole or in part, commencing on a date which is six months from August 25, 2022 until August 25, 2027. The underwriting agreement includes customary representations, warranties and covenants by the Company. It also provides that the Company will indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or contribute to payments the underwriters may be required to make because of any of those liabilities. In exchange for the underwriters’ services, the Company agreed to sell the Units to the underwriters at a purchase price of $4.60 per unit. The Company’s officers and directors and their affiliates have agreed, subject to certain exceptions, not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any shares of our common stock or other securities convertible into or exercisable or exchangeable for shares of our Common Stock until May 27, 2023 without the prior written consent of the underwriter. The Offering closed on August 30, 2022, and the Company sold 2,753,750 shares of Common Stock and 5,507,500 Warrants (6,117,250 Warrants including the Option Warrants) to the underwriters for total gross proceeds of $ 13,774,848 . After deducting the underwriting commissions, discounts, and offering expenses, the Company received net proceeds of $ 12,225,470 . During the year ended December 31, 2021, the Company sold a total of 1,610,000 shares of common stock in exchange for cash proceeds of $ 2,010,000 . Common Share Awards During the year ended December 31, 2020, the Company granted a total of 3,233,336 shares to various employees and consultants for services rendered. The Company recognized stock-based compensation expense of $ 766,656 and 766,656 related to the vesting of the share awards during the year ended December 31, 2022 and 2021. As of December 31, 2022, the Company expects to recognize an additional $447,248 through the end of the requisite service period for these awards, assuming all shares vest. The requisite service period for these awards is the same as the vesting period for each award. As of December 31, 2022, the awards had a remaining service period of approximately 0.75 year. F-17 Table of Contents The Company also awarded a total of 2,800 shares of common stock to the Company’s four independent members of the Board of Directors, with a fair value of $ 16,667 based on the most recent price of common stock sold for cash recognized as part of stock-based compensation during the year ended December 31, 2022. The Company also recognized $ 40,000 of stock-based compensation for director compensation during the year ended December 31, 2022. The first and second quarter shares were awarded to directors immediately, and the Company agreed to issue $ 5,000 worth of shares per director each quarter in the future and pay $ 2,500 in cash per director per quarter. As of December 31, 2022, the Company had accrued $ 60,000 in cash compensation to the directors, included in accounts payable and other liabilities on the consolidated balance sheet. Stock Options During the year ended December 31, 2022, the Company issued a total of 49,560 options with an exercise price of $5.95, and an exercise term of three years. The Company estimated fair value of these options to be $4.41 per share using a Black-Scholes option pricing model, and the expense associated with the options will be recognized over the requite service period of 20 months . The Company also awarded an additional 23,100 options with an exercise price of $14.29 per share and an exercise term of three years. The Company estimated fair value of these options to be $3.63 per share using a Black-Scholes option pricing model, and the expense associated with the options will be recognized over the requite service periods of between 24 and 30 months. The fair value of the stock options was estimate using a Black-Scholes option pricing model and the following assumptions: 1) dividend yield of 0%; 2) risk-free rate of 0.97% to 1.91%; 3) volatility of 127.7% to 129.5% based on a group of peer group companies; 4) a common stock price of $5.95 based on the most recent common stock sales for cash, and 5) an expected term of three years . During the year ended December 31, 2021, the Company award 10,000 common stock options to an employee, of which 500 vested immediately, and 500 per month thereafter until fully vested. The fair value of the stock options was estimate using a black-Scholes option pricing model and the following assumptions: 1) dividend yield of 0%; 2) risk-free rate of 0.49%; 3) volatility of 127.6% based on a group of peer group companies ; and an expected term of three years. A summary of stock option information is as follows: Outstanding Awards Weighted Average Grant Date Fair Value Weighted Average Exercise price Outstanding at December 31, 2020 - $ - $ - Granted 2,100 4.36 5.95 Exercised - - - Forfeited and cancelled - - - Outstanding at December 31, 2021 2,100 $ 4.36 $ 5.95 Granted 72,660 4.16 9.00 Exercised - - - Forfeited and cancelled ( 14,910 ) ( 4.36 ) ( 6.19 ) Outstanding at December 31, 2022 59,850 $ 4.15 $ 9.11 Exercisable at December 31, 2022 18,189 $ 4.15 $ 8.40 The weighted average remaining contractual life is approximately 2.75 years for stock options outstanding with no intrinsic value of as of December 31, 2022. The Company recognized stock-based compensation of $ 121,672 . The Company expects to recognize an additional $ 138,908 of compensation cost related to options that are expected to vest. F-18 Table of Contents Stock Warrants A summary of stock warrant information is as follows: Outstanding Awards Weighted Average Grant Date Fair Value Weighted Average Exercise price Outstanding at December 31, 2021 - - - Granted 6,219,863 4.21 5.01 Exercised - - - Forfeited and cancelled - - - Outstanding at December 31, 2022 6,219,863 $ 4.21 $ 5.01 Exercisable at December 31, 2022 6,137,250 $ 4.21 $ 5.00 The weighted average remaining contractual life is approximately 4.64 years for stock warrants outstanding with no intrinsic value of as of December 31, 2022. NOTE 8 – RELATED PARTY TRANSACTIONS From time to time, the Company pays expenses directly on behalf of the Joint Ventures that it manages and receives funds on behalf of the joint ventures. As of December 31, 2022 the balances due from related parties were $ 54,858 included in current liabilities. During the year ended December 31, 2022, the Company paid the $ 215,000 related to the Company’s capital contribution for its equity interest in JV IV. From time to time, the Company’s CEO paid expenses on behalf of the Company, and the Company funded certain expenses to the CEO. Additionally, the Company received its investments in JV I, JV II and JV III from the CEO. As of December 31, 2022, the Company was owed $ 36,854 by the entities controlled by the Company’s CEO, and the Company owed the CEO $ 0 and $ 480 as of December 31, 2022 and 2021, respectively. No member of management has benefited from the transactions with related parties. NOTE 9 – NOTES PAYABLE On March 15, 2021, the Company entered into a short term financing agreement with a payment services provider for total principal of $ 54,240 and received cash proceeds of $ 48,000 . The Company will pay 17% of its daily sales through the service provider until the total principal is repaid. As of December 31, 2021 the balance had been repaid in full. On September 16, 2021, the Company entered into a short term financing agreement with a payment services provider for total principal of $ 66,600 and received cash proceeds of $ 60,000 . The Company will pay 17 % of its daily sales through the service provider until the total principal is repaid. As of December 31, 2022 the balance had been repaid in full. On June 13, 2022, the Company entered into a short term financing agreement with a payment services provider for total principal of $ 47,520 and received cash proceeds of $ 44,000 . The Company will pay 17 % of its daily sales processed through the service provider until the total principal is repaid. As of December 31, 2022 the balance had been repaid in full. On October 13, 2022, the Company entered into a short term financing agreement with a payment services provider for total principal of $ 82,490 and received cash proceeds of $ 73,000 . The Company will pay 17 % of its daily sales processed through the service provider until the total principal is repaid. As of December 31, 2022 the Company owed $ 68,959 . F-19 Table of Contents NOTE 10 - INCOME TAXES The Company is subject to United States federal income taxes at an approximate rate of 21 %. The components of the income tax provision on the consolidated statements of operations is as follows: Year Ended Year Ended December 31, 2022 December 31, 2021 Current tax expense $ - $ - Deferred tax expense (benefit) - ( 1,314 ) Provision for income taxes, total $ - $ ( 1,314 ) The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows: Year Ended Year Ended December 31, 2022 December 31, 2021 Income tax benefit computed at the statutory rate $ ( 889,215 ) $ ( 399,307 ) Permanent differences 235,561 161,286 Net operating loss carryforwards 653,654 238,021 Temporary differences - - penalties and interest - - Provision for income taxes, current $ - $ - Temporary differences - ( 1,314 ) Deferred tax provision (benefit) $ - $ ( 1,314 ) The Company has the following operating loss carry forwards. As of As of December 31, 2022 December 31, 2021 Net Operating loss carry forwards $ 918,400 $ 238,021 Valuation allowance ( 918,400 ) ( 238,021 ) Deferred tax assets $ - $ - NOTE 11 – SUBSEQUENT EVENTS Management has evaluated events through March 31, 2023, the date these financial statements were available for issuance, and determined there were no events requiring disclosures, except as noted below. On January 13, 2023, the Company, through its subsidiary Onfolio Assets, LLC entered into an Asset Purchase Agreement (“Asset Purchase Agreement”) with Contentellect Limited (“Contentellect”), a Guernsey limited liability company, and Mark Whitman, the sole owner of Contentellect, for the purchase of substantially all of Contentellect’s assets utilized in the operation of the business of providing online (i) content writing services (including white label content creation, eBook writing and eCommerce product description writing), (ii) website link building services (including white label link building, HARO link building and SEO outreach services), (iii) social media marketing services, and (iv) virtual assistant services to individuals, businesses and agencies through the website that the domain name www.contentellect.com points at (the “Business”). Pursuant to the Asset Purchase Agreement, and subject to the terms and conditions contained therein, at the closing, Contentellect agreed to sell to Onfolio Assets LLC the assets, properties and rights of every kind and nature related to the Business (collectively, the “Acquired Assets”), all as more fully described in the Asset Purchase Agreement. The aggregate purchase price for the Acquired Assets is Eight Hundred and Fifty Thousand US Dollars ($ 850,000 ) payable in cash at the closing. F-20