Onfolio Holdings, Inc

Previous wording

The first quarter of 2026 was a transitional quarter during which we continued the integration of our agencies into a more unified "AgencyCo" structure, and Proofread Anywhere continued to scale its advertising spend in a more profitable manner. Revenue for the quarter was $1.87M, compared to $2.81M in Q1 2025 and $2.03M in Q4 2025. Loss from operations was $0.83M, compared to $0.79M in Q1 2025 and $1.26M in Q4 2025. Of the Q1 2026 loss from operations, $204K was amortization of intangible assets from prior acquisitions and $15K was stock-based compensation, both of which are non-cash items.

Current wording

The second quarter of 2026 saw continued integration of our agencies, while the Company focused on improving operating results across the portfolio. Revenue for the quarter was $1.50 million, compared to $3.15 million in Q2 2025. Loss from operations was $0.97 million, compared to $0.51 million in Q2 2025. Of the Q2 2026 loss from operations, approximately $160,000 was amortization of intangible assets from prior acquisitions and $15,000 was stock-based compensation, both of which are non-cash items.

Previous wording

Our EBITDA As Defined in Q1 2026 was $(498,739), compared to $(185,411) in 2025, and was lower in 2026 as a result of decreased gross margins. The decrease in gross margin does not reflect a change in margin at any individual subsidiary, but rather a shift in revenue concentration from our high margin B2C segment to our lower margin B2B services segment. EBITDA As Defined is a Non-GAAP financial measure**.** Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information and limitations regarding these non-GAAP financial measures, including a reconciliation to the comparable U.S. GAAP financial measure.

Current wording

Our EBITDA As Defined in Q2 2026 was $(776,255), compared to $(150,950) in Q2 2025. EBITDA As Defined is a Non-GAAP financial measure. Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information and limitations regarding these non-GAAP financial measures, including a reconciliation to the comparable U.S. GAAP financial measure.

Previous wording

Cost of revenue decreased by $156,093, or 14% for the three months ended March 31, 2026 compared to 2025, primarily driven by lower costs at our Contentellect, RevenueZen, and Proofread Anywhere subsidiaries, partially offset by an increase at Eastern Standard, in line with revenue increases and decreases. The Company's gross profit margin contracted to 49% from 61%, primarily reflecting a shift in revenue mix as higher-margin digital product sales declined as a percentage of total revenue. The components most significant to the Company's cost of revenue are the costs of labor for service fulfillment, content creation, website hosting and maintenance, and the costs of acquiring inventory products for physical product sales.

Current wording

Cost of revenue decreased by $444,380, or 37% for the three months ended June 30, 2026 compared to 2025, reflecting lower service fulfilment costs in line with lower services revenue and lower product costs on reduced product sales. The Company’s gross profit margin decreased in the current period compared to the prior period, primarily reflecting the shift in revenue mix toward the lower-margin B2B services segment. The components most significant to the Company’s cost of revenue are the costs of labor for service fulfilment, content creation, website hosting and maintenance costs and the costs of acquiring new inventory products for physical product sales.

Previous wording

General and Administrative expenses decreased by $900,560, or 41% during the three months ended March 31, 2026 compared to 2025. The decrease was primarily due to lower advertising and marketing costs of $512,000, lower stock-based compensation expense of $258,000, and lower amortization expense of approximately $97,400, reflecting the impairment of intangible assets recorded at December 31, 2025 and certain intangibles reaching the end of their expected life. The remaining decrease of approximately $33,000 was spread across compensation, contractor, and other general and administrative cost categories.

Current wording

General and Administrative expenses decreased by $924,148, or 45% during the three months ended June 30, 2026 compared to 2025. The decrease was primarily due to lower advertising and marketing costs of $577,000, lower stock-based compensation expense of $11,000, and lower amortization expense of approximately $141,000, reflecting the impairment of intangible assets recorded at December 31, 2025 and certain intangibles reaching the end of their expected life. The remaining decrease of approximately $195,000 was spread across compensation, contractor, and other general and administrative cost categories following the integration of our agency businesses.

Previous wording

B2B revenue decreased by $172,086 or 10% during the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease was primarily due to lower revenue at our Contentellect, RevenueZen, SEO Butler, and DDS Rank subsidiaries, partially offset by revenue growth of our Eastern Standard subsidiary and new revenue from our Pace Generative subsidiary, which had no comparable revenue in the prior period.

Current wording

B2B revenue decreased by $756,365 or 38% during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease was primarily due to lower revenue at our Eastern Standard subsidiary, together with lower revenue across our other agency subsidiaries, partially offset by new revenue from our Pace Generative subsidiary, which had no comparable revenue in the prior period.

Previous wording

Our B2C segment includes the results of operations of Proofread Anywhere, Onfolio Assets, Mighty Deals, and Vital Reaction. These entities share characteristics such as the end customers being individual consumers, and sales being more focused on product sales, including digital sales.

Current wording

Our B2C segment includes the results of operations of Proofread Anywhere, Onfolio Assets, Mighty Deals (divested January 2026), and Vital Reaction. These entities share characteristics such as the end customers being individual consumers, and sales being more focused on product sales, including digital sales.

Previous wording

B2C incurred total operating income of $97,378 during the three months ended March 31, 2026 compared to an operating income of $228,158 during the three months ended March 31, 2025 for a decrease of $130,780 or 57%, primarily due to the decrease in sales from the Proofread Anywhere subsidiary.

Current wording

B2C incurred total operating income of $43,258 during the three months ended June 30, 2026 compared to operating income of $150,261 in the comparable 2025 period, with the decrease primarily due to the decrease in sales from the Proofread Anywhere subsidiary.

Previous wording

The Company reported a net loss of $2,572,611, which includes $365,142 in non-cash expenses, a $654,745 default penalty for liquidated damages, a $674,157 non-cash loss on the change in fair value of digital assets, and a $71,392 non-cash loss on the change in fair value of derivative liabilities, for the three months ended March 31, 2026, compared to a net loss of $806,428, which includes $520,297 in non-cash expenses, for the three months ended March 31, 2025. The components of the increase in net loss for the current period are as follows:

Current wording

For the six months ended June 30, 2026, the Company reported a net loss of $7,175,162, which includes a $954,842 non-cash loss on the change in fair value of digital assets, a $654,745 default penalty for liquidated damages, and a $3,019,609 non-cash loss on the change in fair value of derivative liabilities, compared to a net loss of $1,340,867 for the six months ended June 30, 2025. The components of the change in net loss for the current periods are as follows:

Previous wording

Total other expense was $1,739,256 during the three months ended March 31, 2026, compared to other expense of $38,405 during 2025. The increase in other expense was driven primarily by $71,392 loss on the change in fair value of derivative liabilities and a $674,157 loss on the change in fair value of digital assets, neither of which had a comparable amount in the prior period. The Company also recorded an increase in interest expense of approximately $873,000 on the outstanding promissory notes as a result of higher note balances as well as liquidation penalty of approximately $655,000 as a result of the Company’s default on the Senior Secured Notes, a loss on its cost basis investments of $129,007 and a $6,672 loss on the change in fair value of the contingent consideration owed compared to a $54,173 gain in the prior period. These were partially offset by a $107,794 gain on the sale of subsidiary assets recorded during the current period, with no comparable transaction in the prior period.

Current wording

Total other expense was $5,376,299 during the six months ended June 30, 2026, compared to other expense of $66,193 during the six months ended June 30, 2025. The increase in other expense was driven primarily by an increase in interest expense of approximately $1,209,000 on the outstanding notes, a $655,000 default penalty for liquidated damages under the Senior Secured Notes, a $955,000 loss on the change in fair value of digital assets, a $3,020,000 loss on the change in fair value of derivative liabilities, and losses on cost basis investments of $129,000, partially offset by a $108,000 gain on the sale of subsidiary assets recorded during the current period, with no comparable transaction in the prior period.

Previous wording

Revenue decreased by $945,078, or 34% for the three months ended March 31, 2026 compared to 2025. The decrease is primarily due to a decline in sales at our Proofread Anywhere, Contentellect, RevenueZen, Vital Reaction, and SEO Butler subsidiaries. The declines were partially offset by revenue growth at our Eastern Standard subsidiary and new revenue from our Pace Generative subsidiary, which did not exist in the comparable period.

Current wording

B2B revenue decreased by $928,451 or 25% during the six months ended June 30, 2026 compared to 2025. The decrease was primarily due to lower revenue at our Eastern Standard subsidiary, together with lower revenue across our other agency subsidiaries, partially offset by new revenue from our Pace Generative subsidiary, which had no comparable revenue in the prior period.

Previous wording

Net cash used in operating activities was $843,404 and $145,049 for the three months ended March 31, 2026 and 2025, respectively. The increase in cash used reflects a decrease in operating results and a decrease in deferred revenue compared to the prior period. The net loss in the current period was substantially offset by non-cash charges, principally the $71,392 loss on the change in fair value of derivative liabilities, the default penalty from liquidated damages of $654,745 and the $674,157 loss on the change in fair value of digital assets, neither of which existed in the prior period.

Current wording

Net cash used in operating activities was $1,454,536 and $575,164 for the six months ended June 30, 2026 and 2025, respectively. The increase in cash used reflects a decrease in operating results and a decrease in deferred revenue compared to the prior period. The net loss in the current period was substantially offset by non-cash charges, principally the $3,019,609 loss on the change in fair value of derivative liabilities, the default penalty from liquidated damages of $654,745 and the $954,842 loss on the change in fair value of digital assets, none of which existed in the prior period.

Previous wording

The Company had no investing activities for the three months ended March 31, 2026 and 2025.

Current wording

The Company had no investing activities during the six months ended June 30, 2026 and 2025.

Previous wording

Cash flows used in financing activities was $500,214 for the three months ended March 31, 2026 compared to cash provided by financing activities of $297,831 during the three months ended March 31, 2025. During the 2026 period, we paid $248,849 in dividends to preferred stockholders, made payments totaling $97,418 on notes payable, made payments totaling $88,196 on notes payable – related parties, made payments totaling $51,868 related to contingent consideration and made distributions totaling $13,883 to our non-controlling interest holders. During the 2025 period, we received $700,000 in proceeds from sales of Series A preferred stock and we paid $99,250 in dividends to preferred stockholders and made payments totaling $176,624 on notes payable.

Current wording

Cash flows used in financing activities was $471,390 for the six months ended June 30, 2026 compared to cash provided by financing activities of $585,097 during the six months ended June 30, 2025. During the 2026 period, we paid $253,010 in dividends to preferred stockholders, made payments totaling $205,307 on notes payable, made payments totaling $99,771 on notes payable – related parties, made payments totaling $112,119 related to contingent consideration and made distributions totaling $13,883 to our non-controlling interest holders, which was offset by proceeds of $212,700 from notes payable. During the 2025 period, we received $830,000 in proceeds from sales of Series A preferred stock, $358,800 in proceeds from notes payable and $35,965 in proceeds from related party notes payable, which were offset by $201,848 in payments of dividends to preferred stockholders, payments totaling $266,295 on notes payable, payments totaling $133,845 related to contingent consideration and made distributions totaling $37,680 to our non-controlling interest holders

Previous wording

RevenueZen Acquisition: The Company has determined the final amount obligated to pay to the sellers of RevenueZen, contingent upon the business achieving a specified gross profit threshold within one year to be $680,662. On February 28, 2025, the Company and the RevenueZen sellers agreed to the final earn-out amount to be $682,000 and modified the payment terms to be paid with a cash payment of $72,000, $100,000 to be paid through profit sharing by using 30% of Net Operating Income, $100,000 in value for $79,240 stock options to purchase shares of common stock, $70,000 in Series A preferred stock, and $340,000 in a promissory note. The promissory note has a term of 60 months and accrues interest at 19%. The stock options have an exercise price of $1.34, have a term of 10 years, and are vested immediately. As of March 31, 2026, the Company estimated the remaining obligations owed under the revenue share obligation to be $44,299.

Current wording

RevenueZen Acquisition: The Company has determined the final amount obligated to pay to the sellers of RevenueZen, contingent upon the business achieving a specified gross profit threshold within one year to be $680,662. On February 28, 2025, the Company and the RevenueZen sellers agreed to the final earn-out amount to be $682,000 and modified the payment terms to be paid with a cash payment of $72,000, $100,000 to be paid through profit sharing by using 30% of Net Operating Income, $100,000 in value for $79,240 stock options to purchase shares of common stock, $70,000 in Series A preferred stock, and $340,000 in a promissory note. The promissory note has a term of 60 months and accrues interest at 19%. The stock options have an exercise price of $1.34, have a term of 10 years, and are vested immediately. As of June 30, 2026, the Company estimated the remaining obligations owed under the revenue share obligation to be $16,102.

Previous wording

First Page Acquisition: The Company agreed to pay a revenue share amount equal to 18% of gross revenues for the acquired customers for 3 years following the acquisition date. As of March 31, 2026, the Company estimated the remaining obligations owed under the revenue share provisions to be $74,884.

Current wording

First Page Acquisition: The Company agreed to pay a revenue share amount equal to 18% of gross revenues for the acquired customers for 3 years following the acquisition date. As of June 30, 2026, the Company estimated the remaining obligations owed under the revenue share provisions to be $56,265.