ONFO 10-Q
Onfolio Holdings, Inc (ONFO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________to ___________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter) |
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(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
| (Zip Code) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
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| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Number of shares of common stock outstanding as of August 19, 2026 was
| 2 |
| Table of Contents |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report on Form 10-Q contains forward-looking statements. Forward-looking statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “we believe,” “we intend,” “may,” “should,” “will,” “could” and similar expressions denoting uncertainty or an action that may, will or is expected to occur in the future. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements. You should not place undue reliance on these forward-looking statements.
Examples of forward-looking statements include, but are not limited to:
| ● | the anticipated timing of the development of future products or services; |
| ● | projections of costs, revenue, earnings, capital structure and other financial items; |
| ● | statements of our plans and objectives; |
| ● | statements regarding the capabilities of our business operations; |
| ● | statements of expected future economic performance; |
| ● | statements regarding competition in our market; and |
| ● | assumptions underlying statements regarding us or our business. |
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:
| ● | our ability to manage our current and projected financial position and estimated cash burn rate, including our estimates regarding expenses, future revenues and capital requirements, and ultimately our ability to continue as a going concern; |
| ●
| our ability to raise additional capital or additional funding to further develop and expand our business to meet our long-term business objectives. We have limited revenues and we cannot predict when or if we will achieve significant revenues and sustained profitability; |
| ● | our ability to achieve significant revenues and sustained profitability; |
| ● | impairment of goodwill and long-lived assets; |
| ● | changes in customer demand; |
| ● | our ability to develop our brands cost-effectively, to attract new customers and retain customers on a cost-effective basis; |
| ● | our ability to compete in the markets in which our websites participate; |
| ● | our ability to make strategic actions, including acquisitions and dispositions and our success in integrating acquired businesses and improving their profitability; |
| ● | our ability to continue to successfully manage our websites on a combined basis; |
| ● | security breaches, cybersecurity attacks and other significant disruptions in our information technology systems; |
| ● | developments and changes in laws and regulations, including increased regulation of our industry through legislative action and revised rules and standards; |
| ● | our market position and market conditions, including the effects of government policies, tariffs and trade barriers; |
| ● | the occurrence of hostilities, political instability or catastrophic events and wars; |
| ● | our ability to maintain the listing or trading of our common stock and warrants on the NASDAQ Capital Market and the potential impact on our business if we fail to do so; |
| ● | natural events such as severe weather, fires, floods and earthquakes, or man-made or other disruptions of our operating systems, structures or equipment; |
| ● | risks related to, and the costs associated with, environmental, social and governance (ESG) matters, including the scope and pace of related rulemaking activity; |
| ● | other risks to which our Company is subject; |
| ● | other factors beyond the Company’s control; and |
| ● | other factors and risks described under “Risk Factors” herein and in any of the Company’s subsequent reports filed with the SEC and available on its website at www.sec.gov. |
The ultimate correctness of these forward-looking statements depends upon a number of known and unknown risks and events. We discuss our known material risks under Part I Item 1.A “Risk Factors” contained in our Company’s Annual Report on Form 10-K for the year ended December 31, 2025 and Part II, Item 1.A “Risk Factors” in this report on Form 10-Q. Many factors could cause our actual results to differ materially from the forward-looking statements. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
The forward-looking statements speak only as of the date on which they are made, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
| 3 |
| Table of Contents |
ITEM 1. FINANCIAL STATEMENTS.
Onfolio Holdings, Inc.
Consolidated Balance Sheets
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| June 30, |
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| December 31, |
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| 2026 |
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| 2025 |
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Assets |
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Current Assets: |
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Cash |
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Accounts receivable, net |
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Inventory |
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Prepaids and other current assets |
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Deferred offering costs |
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Total Current Assets |
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Intangible assets, net |
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Goodwill |
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Investment in digital assets |
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Fixed Assets, net |
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Due from related party, net |
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Investment in unconsolidated joint ventures, cost method |
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Investment in unconsolidated joint ventures, equity method |
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Total Assets |
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Liabilities and stockholders’ Equity |
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Current Liabilities: |
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Accounts payable and other current liabilities |
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Dividends payable |
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Notes payable, current |
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Notes Payable - related parties, current |
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Convertible notes, net of discount, current |
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Contingent consideration |
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Derivative Liability |
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Deferred revenue |
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Total Current Liabilities |
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Notes payable - related parties |
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Convertible notes, net of discount |
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Total Liabilities |
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Commitments and Contingencies (Note 14) |
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Stockholders’ Equity (Deficit): |
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Preferred stock, $ |
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Series A Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
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Total Onfolio Inc. stockholders’ equity (deficit) |
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Non-Controlling Interests |
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Total Stockholders’ Equity (Deficit) |
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Total Liabilities and Stockholders’ Equity (Deficit) |
| $ |
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| $ |
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The accompanying notes are an integral part of these unaudited consolidated financial statements
| 4 |
| Table of Contents |
Onfolio Holdings Inc.
Consolidated Statements of Operations
(Unaudited)
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| For the Three Months Ended June 30, |
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| For the Six Months Ended June 30, |
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| 2026 |
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| 2025 |
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Revenue, services |
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Revenue, product sales |
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Total Revenue |
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Cost of revenue, services |
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Cost of revenue, product sales |
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Total cost of revenue |
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Gross profit |
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Operating expenses |
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Selling, general and administrative |
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Professional fees |
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Acquisition costs |
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Total operating expenses |
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Loss from operations |
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Other income (expense) |
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Equity method income (loss) |
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Dividend income |
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Interest income (expense), net |
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Change in fair value of contingent consideration |
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Change in fair value of digital assets |
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Change in fair value of derivative liabilities |
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Impairment of equity and cost method investment |
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Gain on sale of subsidiary assets |
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Other income |
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Total other expense, net |
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Loss before income taxes |
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Income tax (provision) benefit |
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Net loss |
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Net (income) loss attributable to noncontrolling interest |
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Net loss attributable to Onfolio Holdings Inc. |
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Preferred Dividends |
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Net loss to common shareholders |
| $ | ( | ) |
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| $ | ( | ) |
| $ | ( | ) |
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Net loss per common shareholder |
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Basic and diluted |
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Weighted average shares outstanding |
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Basic and diluted |
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The accompanying notes are an integral part of these unaudited consolidated financial statements
| 5 |
| Table of Contents |
Onfolio Holdings, Inc.
Consolidated Statements of Stockholders’ Equity
For the Six Months Ended June 30, 2026 and 2025
(Unaudited)
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| Preferred Stock, $0.001 Par value |
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| Common Stock, $0.001 Par Value |
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| Additional Paid-In |
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| Accumulated |
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| Accumulated Other Comprehensive |
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| Non Controlling |
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| Total Stockholders’ |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Capital |
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| Deficit |
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| Income |
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| Interest |
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| Equity |
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Balance, December 31, 2025 |
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Stock-based compensation |
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Preferred dividends |
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Foreign currency translation |
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Distribution to non-controlling interest |
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Net loss |
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Balance, March 31, 2026 |
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Common shares issued as commitment fee |
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Common shares issued for conversion of notes payable and accrued interest |
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Relief of derivative liability upon conversion of notes |
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Common shares issued for cashless exercise of stock option |
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Stock-based compensation |
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Preferred dividends |
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Foreign currency translation |
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Net loss |
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Balance, June 30, 2026 |
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|
Balance, December 31, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
|
| $ |
| ||||||||
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|
|
|
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|
|
Sale of preferred stock for cash |
|
|
|
|
|
|
|
| - |
|
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| ||||||||
Preferred stock and common stock options issued for payment of contingent consideration |
|
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| - |
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| ||||||||
Stock-based compensation |
|
| - |
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|
|
| - |
|
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|
|
|
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| |||||||
Non-controlling interest investment for payment of note payable |
|
| - |
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|
|
|
| - |
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| |||||||
Preferred dividends |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) | |||||
Foreign currency translation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
| |||||||
Distributions to non-controlling interest |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) | ||||
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
| ||||||||
Sale of preferred stock for cash |
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Stock-based compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Preferred dividends |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) | |||||
Foreign currency translation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||||
Distributions to non-controlling interest |
|
| - |
|
|
|
|
|
| - |
|
|
| -- |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) | |||||
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2025 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
|
| $ |
| ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 6 |
| Table of Contents |
Onfolio Holdings, Inc.
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2026 and 2025
(Unaudited)
|
| 2026 |
|
| 2025 |
| ||
Cash Flows from Operating Activities |
|
|
|
|
|
| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
|
|
|
| ||
Equity method (income)/loss |
|
| ( | ) |
|
| ( | ) |
Amortization of intangible assets |
|
|
|
|
|
| ||
Amortization of debt discounts and debt issuance costs |
|
|
|
|
|
| ||
Liquidation damages upon registration default |
|
|
|
|
|
| ||
Depreciation expense |
|
|
|
|
|
| ||
Change in fair value of contingent consideration |
|
|
|
|
| ( | ) | |
Impairment of equity and cost method investments |
|
|
|
|
|
| ||
Change in fair value of derivative liabilities |
|
|
|
|
|
| ||
Change in fair value of digital assets |
|
|
|
|
|
| ||
Earnings on digital assets |
|
| ( | ) |
|
|
| |
Net change in: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
|
|
|
| ||
Inventory |
|
|
|
|
|
| ||
Prepaids and other current assets |
|
|
|
|
| ( | ) | |
Accounts payable and other current liabilities |
|
|
|
|
| ( | ) | |
Due to joint ventures |
|
|
|
|
| ( | ) | |
Deferred revenue |
|
| ( | ) |
|
| ( | ) |
Net cash used in operating activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
Proceeds from sale of Series A preferred stock |
|
|
|
|
|
| ||
Payments of preferred dividends |
|
| ( | ) |
|
| ( | ) |
Distributions to non-controlling interest holders |
|
| ( | ) |
|
| ( | ) |
Proceeds from notes payable |
|
|
|
|
|
| ||
Payments on note payables |
|
| ( | ) |
|
| ( | ) |
Proceeds from notes payable – related parties |
|
|
|
|
|
| ||
Payments on note payables – related parties |
|
| ( | ) |
|
|
| |
Payments on contingent consideration |
|
| ( | ) |
|
| ( | ) |
Net cash provided by (used in) financing activities |
|
| ( | ) |
|
|
| |
|
|
|
|
|
|
|
|
|
Effect of foreign currency translation |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Net Change in Cash |
|
| ( | ) |
|
|
| |
Cash, Beginning of Period |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Cash, End of Period |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Cash Paid For: |
|
|
|
|
|
|
|
|
Income Taxes |
| $ |
|
| $ |
| ||
Interest |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Supplemental Non-cash Disclosures |
|
|
|
|
|
|
|
|
Preferred dividends accrued |
| $ |
|
| $ |
| ||
Digital assets received for settlement of accounts receivable |
| $ |
|
| $ |
| ||
Shares issued for conversion of convertible notes payable and accrued interest |
| $ |
|
| $ |
| ||
Settlement of derivative liability upon conversion of notes payable |
| $ | |
|
| $ | |
|
Shares issued for commitment fee |
| $ |
|
| $ |
| ||
Settlement of contingent consideration for note payable, preferred stock and stock options |
| $ |
|
| $ |
| ||
Non-controlling interest issued for settlement of note payable |
| $ |
|
| $ |
| ||
Common stock issued for exercise of stock options |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 7 |
| Table of Contents |
ONFOLIO HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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, advertising, and content placement on its online businesses, and product sales on certain sites. The Company owns multiple online businesses and manages online businesses on behalf of certain unconsolidated entities in which it holds equity interests. As described in “Note 4 –Segments Information”, we operate in two business segments: Business to Business (“B2B”) and Business to Consumer (“B2C).
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”) for interim information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (the “SEC”). The Company’s fiscal year end is December 31. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the period presented. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K as filed with the SEC on March 31, 2026 (the “Annual Report”).
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 (divested January 2026), Onfolio Assets, LLC, Onfolio Management, LLC, WP Folio, LLC, Proofread Anywhere, LLC, Contentellect, LLC, SEO Butler Limited, Pace Generative LLC, and DealPipe, LLC. The Company also maintains majority ownership in DDS Rank, LLC, RevenueZen, LLC, and Eastern Standard which are owned
Foreign Currency Translation
The Company, and the majority of its subsidiaries, 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 British 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
| 8 |
| Table of Contents |
The current investment in unconsolidated affiliates accounted for under the equity method consists of a
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 Accounting Standards Codification (“ ASC”) 810, as the joint ventures 1) have sufficient equity to finance its activities; 2) have equity owners that as a group have the characteristics of a controlling financial interest in the business, through the ability to vote on a majority basis to change the managing member of the respective joint ventures, and 3) are structured with substantive voting rights. 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.
The Company, through its subsidiary Onfolio Management LLC, is the manager of Onfolio Agency SPV, LLC (“OA SPV”), and Onfolio Agency SPV 2, LLC (“OA SPV 2”), collectively referred to as “OA SPVs”. The Company does not hold any equity interest in OA SPVs, but will receive
The Company, through its subsidiary RevenueZen, LLC, is the manager of CliAcquire, LLC (“CliAcquire”). The Company holds a
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.
| 9 |
| Table of Contents |
Goodwill and Other Intangibles
The Company accounts for goodwill in a purchase business combination as the excess of the cost over the estimated fair value of net assets acquired. Business combinations can also result in the recognition of other intangible assets. Amortization of intangible assets, if applicable, occurs over their estimated useful lives. Goodwill, which is not amortized, is tested for impairment on an annual basis (or an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value). When testing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company elects to perform a qualitative assessment and determines that an impairment is more likely than not, then performance of the quantitative impairment test is required. The quantitative assessment is performed to estimate the fair value of a reporting unit. To determine the reasonableness of the estimated fair values, the Company reviews the assumptions to determine that neither the income approach nor the market approach provides significantly different valuations. If the estimated fair value exceeds the carrying value, no further work is required and no impairment loss is recognized. If the carrying value exceeds the estimated fair value, a non-cash impairment loss is recognized in the amount of that excess.
When performing the quantitative assessment, key assumptions used in the income approach are updated when the analysis is performed for each reporting unit. The assumptions that have the most significant effect on the fair value calculations are the projected revenue growth rates, future operating margins, discount rates, and terminal values. While the Company uses reasonable and timely information to prepare its discounted cash flow analysis, actual future cash flows or market conditions could differ significantly and could result in future impairment charges related to recorded goodwill balances.
Recently acquired reporting units generally represent a higher inherent risk of impairment, which typically decreases as the businesses are integrated into the enterprise. Negative industry or economic trends, disruptions to its business, actual results significantly below expected results, unexpected significant changes or planned changes in the use of the assets, divestitures, and market capitalization declines may have a negative effect on the fair value of the Company’s reporting units.
Indefinite lived intangible assets are not amortized, but are separately tested for impairment during the fourth quarter of the fiscal year or on an interim basis if an event occurs that indicates the fair value is more likely than not below the carrying value. The Company first qualitatively assesses whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of an indefinite-lived trade name is less than its carrying amount. If necessary, the Company conducts a quantitative assessment using the relief-from-royalty method. This methodology assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these assets. To the extent the Company determines a fair value, the inputs used represent a Level 3 fair value measurement in the FASB fair value hierarchy given that the inputs are unobservable. The assumptions that have the most significant effect on the fair value calculations are the royalty rates, projected revenue growth rates, discount rates, and terminal values. The royalty rate is determined based on the profitability of the trade name to which it relates and observed market royalty rates. Revenue growth rates are determined after considering current and future economic conditions, recent sales trends, or other variables.
The assessment of fair value for impairment purposes requires significant judgments to be made by management. Although forecasts are based on assumptions that are considered reasonable by management and consistent with the plans and estimates management uses to operate the underlying businesses, there is significant judgment in estimating future operating results. Changes in estimates or the application of alternative assumptions could produce significantly different results.
The Company evaluates whether there has been an impairment of identifiable intangible assets with definite useful economic lives, or of the remaining life of such assets, when certain indicators of impairment are present. In the event that facts and circumstances indicate that the cost or remaining period of amortization of any asset may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future gross, undiscounted cash flows associated with the asset would be compared to the asset’s carrying amount to determine if a write-down to fair value or a revision in the remaining amortization period is required.
| 10 |
| Table of Contents |
Long-lived Assets
The Company determines whether there has been an impairment of long-lived assets, excluding goodwill and other intangible assets, when certain indicators of impairment are present. In the event that facts and circumstances indicate that the cost or life of any long-lived asset may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future gross, undiscounted cash flows associated with the asset would be compared to the asset’s carrying amount to determine if a write-down to fair value or a revision to the remaining useful life is required. Future adverse changes in market conditions or poor operating results of underlying long-lived assets could result in losses or an inability to recover the carrying value of the long-lived assets that may not be reflected in the assets’ current carrying value, thereby possibly requiring an impairment charge or acceleration of depreciation or amortization expense in the future.
Digital Assets
The Company’s digital assets primarily include Bitcoin, the native cryptocurrency on the Bitcoin blockchain (“BTC”), Ether, the native cryptocurrency of the Ethereum blockchain (“ETH”), and Solana, the native cryptocurrency of the Solana blockchain (“SOL”), collectively the “Digital Assets”.
Cryptocurrency assets within the scope of ASC 350-60 Intangibles—Goodwill and Other—Crypto Assets(“ASC 350-60):
Our Digital Asset tokens have been determined to fall within the scope of ASC 350-60. The Company reflects cryptocurrency assets held at fair value on the consolidated balance sheets within the Digital Assets line item. Changes in the fair value of cryptocurrency assets are recognized in income, reflected in the Change in fair value of digital assets category within the consolidated statement of operations.
In determining the fair value of digital assets in accordance with ASC 820, Fair Value Measurement (“ASC 820”). The Company utilizes BitGo as the principal market and for pricing in determining the fair value of its Digital Asset holdings. The Company uses a first-in, first-out methodology to assign costs to digital assets. The fair value of digital assets are considered a level 1 fair value measurement.
Custodian Risk
The Company’s Digital Assets are held with a single third-party custodian, BitGo, which we selected based on various factors, including their financial strength and industry reputation. Custodian risk refers to the potential loss, theft, or misappropriation of our Bitcoin assets due to operational failures, cybersecurity breaches, or financial difficulties experienced by these third parties. Although we periodically monitor the financial health, insurance coverage, and security measures of our custodians, reliance on such third parties inherently exposes us to risks that we cannot fully mitigate.
Native Staking
The Company utilized one third-party asset manager to manage and stake ETH and SOL on its behalf for the periods ended June 30, 2026 and December 31, 2025. Under these arrangements, the Company’s ETH and SOL is held by a qualified custodian and staked in the Ethereum and Solana protocol through a third-party validator operator (e.g., BitGo). The validator operator manages the staking process and delegates the Company’s ETH and SOL to network validators. When selected by the networks, these validators earn staking rewards and transaction fees proportional to the amount of stake delegated.
ETH and SOL used in native staking is retained on the Company’s balance sheet as a crypto asset measured at fair value in accordance with ASC 350-60. The Company does not derecognize ETH and SOL when participating in native staking because it retains the ability to direct the use of the asset and obtain substantially all benefits.
The validator operator (e.g., BitGo) is not considered a customer under ASC606 as the service provided to BitGo does not represent an output as part of the entity’s ordinary operating strategy. As such the earnings are recorded as other income in the statement of operations.
| 11 |
| Table of Contents |
Earnings from native staking is recognized at the end of each daily period, when the Company’s right to staking rewards becomes determinable (i.e., when the constraint is lifted). The amount recognized as earnings is measured at the fair value of rewards at contract inception for that day, net of validator commissions, in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”) and ASC 820. Rewards represent noncash consideration and are measured using quoted prices in the principal market at contract inception. Subsequent changes in the fair value of ETH and SOL after initial recognition are recorded as unrealized gains or losses.
Revenue Recognition
The Company follows the guidance of the FASB ASC 606, Revenue from Contracts with Customers 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 |
The Company primarily earns revenue through website management, digital services, advertising and content placement on its online businesses, 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.
The revenue from our Eastern Standard subsidiary is derived from website design and implementation contracts and typically span between 4 to 12 months. These contracts continuously transfer control to the customer as all of the work is completed electronically and is transferable to the customer at any point in time. Contract costs include labor, materials, and indirect costs.
We have numerous contracts that are in various stages of completion which require estimates to determine the forecasted costs at completion. Due to the nature of the work left to be performed on many of our contracts, the estimation of total cost at completion for fixed-price contracts is complex, subject to many variables and requires significant judgment. Estimates of total cost at completion are made each period and changes in these estimates are accounted for prospectively as cumulative adjustments to revenue recognized in the current period. If estimates of costs to complete fixed-price contracts indicate a loss, a provision is made through a contract write-down for the total loss anticipated.
Contract modifications are routine in the performance of our contracts. Contracts are often modified to account for changes in the contract specifications or requirements. In most instances, contract modifications are for goods or services that are not distinct, and, therefore, are accounted for as part of the existing contract.
| 12 |
| Table of Contents |
The following table presented disaggregated revenue information for the three and six months ended June 30, 2026 and 2025:
|
| For the Three Months ended June 30, |
|
| For the Six Months ended June 30, |
| ||||||||||
|
| 2026 |
|
| 2025 |
|
| 2026 |
|
| 2025 |
| ||||
Website management |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Advertising and content revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Product sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Digital Product Sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total revenue |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
The Company does not have any single customer that accounted for greater than 10% of revenue during the three and six months ended June 30, 2026 and 2025.
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.
Cost of Service revenue which includes 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. As of June 30, 2026 the effect of
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.
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 June 30, 2026.
Derivative Financial Instruments
Derivatives are measured at their fair value on the balance sheet. In determining the appropriate fair value, the Company uses a binomial model. Changes in fair value are recorded in the consolidated statements of operations.
| 13 |
| Table of Contents |
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.
The following table presents information about the Company’s liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of June 30, 2026 and December 31, 2025:
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Fair value at June 30, 2026 |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cryptocurrency holdings |
| $ |
|
| $ | - |
|
| $ | - |
|
| $ |
| ||
Total assets |
| $ |
|
| $ | - |
|
| $ | - |
|
| $ |
| ||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability |
| $ | - |
|
| $ | - |
|
| $ |
|
| $ |
| ||
Total liabilities |
| $ | - |
|
| $ | - |
|
| $ |
|
| $ |
| ||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Fair value at December 31, 2025 |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cryptocurrency holdings |
| $ |
|
| $ | - |
|
| $ | - |
|
| $ |
| ||
Total assets |
| $ |
|
| $ | - |
|
| $ | - |
|
| $ |
| ||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability |
| $ | - |
|
| $ | - |
|
| $ |
|
| $ |
| ||
Total liabilities |
| $ | - |
|
| $ | - |
|
| $ |
|
| $ |
| ||
| 14 |
| Table of Contents |
Segment Reporting
The Company manages its operations under two segments for the purpose of assessing performance and making operating decisions – Business to Business (“B2B”) and Business to Consumer (“B2C)”. The Company’s Chief Operating Decision Maker (“CODM”) is its executive management committee. The CODM allocates resources and evaluates the performance of the Company using information about combined net income from operations. All significant operating decisions are based upon an analysis of the Company as two operating segments, which are the same as its reporting segments.
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 our common 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 closing price of its common stock as the most reasonable indication of fair value.
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.
Advertising
The Company expenses advertising costs as they are incurred. Advertising costs were $
Reclassifications
Certain reclassifications have been made to our prior year’s consolidated financial statements to conform to our current year presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit.
| 15 |
| Table of Contents |
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, and in January 2025, the FASB issued ASU 2025-01, Clarifying the Effective Date (“ASU 2025-01”). The amendments are intended to enhance disclosures regarding an entity’s costs and expenses by requiring additional disaggregated information disclosures about certain income statement expense line items. The amendments, as clarified by ASU 2025-01, are effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the effect of this pronouncement on its disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). ASU 2025-05 amends ASC, Financial Instruments – Credit Losses (Topic 326) (“ASC Topic 326”) to simplify how entities measure credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC, Revenue from Contracts with Customers (Topic 606) (“ASC Topic 606”). This update allows entities to assume that current conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when estimating expected credit losses. ASU 2025-05 is effective for interim and annual periods beginning after December 15, 2025. Early adoption is permitted. The Company adopted this standard effective January 1, 2026, which did not have a material impact on the Company’s consolidated financial statements.
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 June 30, 2026, 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 – SEGMENT INFORMATION
The Company manages its operations under two segments for the purpose of assessing performance and making operating decisions – Business to Business (“B2B”) and Business to Consumer (“B2C)”. The Company’s Chief Operating Decision Maker (“CODM”) is our executive management committee. The CODM allocates resources and evaluates the performance of the Company using information about combined net income from operations. All significant operating decisions are based upon an analysis of the Company as two operating segments, which are the same as its reporting segments.
We operate in two business segments: B2B and B2C. We organize our business segments based on the nature of products and services offered, and the economic characteristics of each segment. Following is a brief description of the activities of our business segments.
B2B
Our B2B segment includes the results of operations of Eastern Standard, RevenueZen, DDS Rank, SEO Butler, Contentellect, Pace Generative and DealPipe. These entities share similar characteristics such as customers being businesses, and being primarily service-related revenue.
B2C
Our B2C segment includes the results of operations of Proofread Anywhere, 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.
| 16 |
| Table of Contents |
Selected Financial Data by Business Segment
Net sales and operating profit of the Company’s business segments exclude intersegment sales, cost of sales and profit as these activities are eliminated in consolidation and thus are not included in management’s evaluation of performance of each segment. Our Executive Management Committee serves as our Chief Operating Decision Maker (CODM) and is responsible for reviewing segment performance and making decisions regarding resource allocation. Our CODM evaluates each segment’s performance based on metrics such as net sales, operating profit, and other key financial indicators, guiding strategic decisions to align with company-wide goals. Business segment operating profit includes the Company’s share of earnings or losses from equity method investees as the operating activities of the equity method investees are closely aligned with the operations of its business segments.
Summary Operating Results
Sales, cost of sales and operating profit for each of our business segments were as follows (in millions):
|
| For the Three Months Ended June 30, 2026 |
| |||||||||||||
|
| B2B |
|
| B2C |
|
| CORPORATE |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenue, services |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Revenue, product sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total Revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue, services |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of revenue, product sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Professional fees |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |
|
| For the Six Months Ended June 30, 2026 |
| |||||||||||||
|
| B2B |
|
| B2C |
|
| CORPORATE |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenue, services |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Revenue, product sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total Revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue, services |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of revenue, product sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Professional fees |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |
| 17 |
| Table of Contents |
|
| For the Three Months Ended June 30, 2025 |
| |||||||||||||
|
| B2B |
|
| B2C |
|
| CORPORATE |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenue, services |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Revenue, product sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total Revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue, services |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of revenue, product sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Professional fees |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Acquisition costs |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | ||
|
| For the Six Months Ended June 30, 2025 |
| |||||||||||||
|
| B2B |
|
| B2C |
|
| CORPORATE |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenue, services |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Revenue, product sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total Revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue, services |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of revenue, product sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Professional fees |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Acquisition costs |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | ||
| 18 |
| Table of Contents |
Included within selling, general and administrative is intangible asset amortization expense of $
Unallocated Items
Business segment operating profit excludes the other items not considered part of management’s evaluation of segment operating performance such as a portion of management and administration costs, legal fees and settlements, stock-based compensation expense, significant asset impairments, gains or losses from divestitures, intangible asset amortization expense, and other miscellaneous corporate activities. Excluded items are included in the reconciling item “Corporate” between operating profit from our business segments and our consolidated operating profit.
Assets
Total assets for each of our business segments were as follows:
|
| As of June 30, 2026 |
|
| As of December 31, 2025 |
| ||
B2B |
| $ |
|
| $ |
| ||
B2C |
|
|
|
|
|
| ||
Total business segment assets |
|
|
|
|
|
| ||
Corporate assets |
|
|
|
|
|
| ||
Total Assets |
| $ |
|
| $ |
| ||
Corporate assets primarily include cash and cash equivalents, and investments in unconsolidated joint ventures. During the six months ended June 30, 2026, the Company incurred no reportable capital expenditures or additions to goodwill related to its segments.
NOTE 5 – INVESTMENTS IN OTHER BUSINESSES
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 authority. The manager of JV I can be removed by a majority vote of the equity holders of JV I. On August 1, 2020, the Company received an investment of
| 19 |
| Table of Contents |
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 authority. 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
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 1II 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
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 $
On March 4, 2024, the Company invested $
| 20 |
| Table of Contents |
On May 31, 2024, the Company, through its subsidiary Revenue Zen LLC, invested $
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
During the year ended December 31, 2025, the Company recorded full impairment loss of $
The balance sheet of JV IV at June 30, 2026 included total assets of $
|
| Three Months ended June 30, |
|
| Six Months ended June 30, |
| ||||||||||
|
| 2026 |
|
| 2025 |
|
| 2026 |
|
| 2025 |
| ||||
Revenue |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Net income (loss) |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||
The Company recognized equity method income (loss) of $
NOTE 6 – INTANGIBLE ASSETS
The following table represents the balances of intangible assets as of June 30, 2026 and December 31, 2025:
|
| Estimated life |
| June 30, 2026 |
|
| December 31, 2025 |
| ||
Website Domains |
| Indefinite |
| $ |
|
| $ |
| ||
Website Domains |
|
|
|
|
|
|
| |||
Customer relationships |
|
|
|
|
|
|
| |||
Trademarks and Tradenames |
|
|
|
|
|
|
| |||
Non-compete agreements |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
| ||
Accumulated Amortization - Website domains |
|
|
|
| ( | ) |
|
| ( | ) |
Accumulated Amortization - Customer Relationships |
|
|
|
| ( | ) |
|
| ( | ) |
Accumulated Amortization - Trademarks / Tradenames |
|
|
|
| ( | ) |
|
| ( | ) |
Accumulated Amortization - Non-Compete |
|
|
|
| ( | ) |
|
| ( | ) |
Net Intangible |
|
|
| $ |
|
| $ |
| ||
| 21 |
| Table of Contents |
For the three months ended June 30, 2026 and 2025, the Company recognized $
The following is an amortization analysis of the annual amortization of intangible assets on a fiscal year basis as of June 30, 2026:
For the year ended December 31, schedule of annual expected amortization expense |
| Amount |
| |
|
|
|
| |
2026 (6 months remaining) |
| $ |
| |
2027 |
|
|
| |
2028 |
|
|
| |
2029 |
|
|
| |
2030 |
|
|
| |
Thereafter |
|
|
| |
Total remaining intangibles amortization |
| $ |
| |
NOTE 7 - DIGITAL ASSETS
The Company holds BTC, ETH, and SOL (all in scope of ASC 350-60), The following presents a summary of the Company’s digital asset holdings as of June 30, 2026, and activity for the six months ended June 30, 2026. For detailed accounting policies related to digital assets, refer to Note 2.
Crypto assets within the scope of ASC 350-60:
The following table presents the Company’s significant crypto assets holdings as of June 30, 2026:
|
| June 30, 2026 |
| |||||||||||||
|
| Quantity |
|
|
|
|
| |||||||||
|
| Free |
|
| Staked |
|
| Cost basis |
|
| Fair value |
| ||||
BTC |
|
| 5.32 |
|
|
| - |
|
| $ |
|
| $ |
| ||
ETH |
|
| 34.27 |
|
|
| 288.06 |
|
|
|
|
|
|
| ||
SOL |
|
| - |
|
|
| 6,971.79 |
|
|
|
|
|
|
| ||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Total |
|
|
|
|
|
|
|
|
| $ |
|
| $ |
| ||
The following table presents a roll-forward of the Company’s Digital Assets for the six months ended June 30, 2026:
|
| Fair value |
| |
Fair value as of December 31, 2025 |
| $ |
| |
Additions |
|
|
| |
Receipt and accrual of tokens from native staking activities |
|
|
| |
Receipt of tokens from customer payments |
|
|
| |
Change in fair value of tokens |
|
| ( | ) |
Fair value as of June 30, 2026 |
| $ |
| |
The Company’s staked token are held under native staking and are maintained in the original token balances. The staked token are not restricted and can be unstaked by the Company at any time.
| 22 |
| Table of Contents |
The net loss on change in fair value of Digital Assets of $
The Company’s BTC, ETH, and SOL Digital Assets serve as collateral against the Senior Secured Convertible Notes as discussed in Note 10, and pursuant to the note agreement any transactions regarding these assets must also be approved by the note holder. As of June 30, 2026, the fair value of the restricted Digital Assets was $
NOTE 8 – STOCKHOLDERS’ EQUITY
Preferred stock
The Company’s authorized preferred stock consists of
During the six months ended June 30, 2026 and 2025, the Company recognized $
As of June 30, 2026 and December 31, 2025, there were
Common stock
The Company’s authorized common stock consists of
Equity Purchase Agreement
On April 10, 2026, the Company entered into an Equity Purchase Facility Agreement (the “Purchase Agreement”) with a certain institutional investor (the “Investor”).
Pursuant to the Purchase Agreement, the Company has the right, but not the obligation, to sell to the Investor, from time to time and in the Company’s sole discretion, up to an aggregate of $
During the period commencing on the date of the Purchase Agreement and expiring upon the date of termination of the Purchase Agreement, and subject to the satisfaction or waiver, on each Advance Notice Date (as defined in the Purchase Agreement), of each of the conditions precedent set forth in the Purchase Agreement, sales of common stock under the Purchase Agreement may be made in one or more advances (each, an “Advance”) initiated by the Company through delivery of a notice (each, an “Advance Notice”) to the Investor. The purchase price per share issued pursuant to any Advance Notice will be determined pursuant to the terms of the Purchase Agreement.
| 23 |
| Table of Contents |
There is no mandatory minimum number of shares that may be sold in any Advance, provided that each requested Advance may not exceed the Maximum Advance Amount (as defined in the Purchase Agreement) and each Advance is subject to certain limitations described in the Purchase Agreement, including, but not limited to, a beneficial ownership limitation prohibiting the Investor and its affiliates from beneficially owning more than 9.99% of the outstanding common stock of the Company at any time.
Pursuant to the Purchase Agreement, and in accordance with the requirements of Nasdaq Listing Rule 5635(d), issuances under the Purchase Agreement are further limited such that the aggregate number of shares issued may not exceed 19.99% of the outstanding common stock of the Company as of the date of the Purchase Agreement, unless the Company has obtained stockholder approval from the requisite number of stockholders of the common stock approving such issuances. Pursuant to the terms of the Purchase Agreement, the Company is required to use its best efforts to solicit its stockholders’ approval of the issuance of all of the shares of common stock issuable pursuant to the Purchase Agreement in compliance with the rules and regulations of Nasdaq.
The Company is not obligated to make sales of common stock under the Purchase Agreement to the Investor and there are no minimum draw requirements, commitment fees (other than described below), or penalties for non-use. The Investor has no right to require the Company to initiate any Advance.
The proceeds from any sales of common stock under the Purchase Agreement must be used by the Company as follows: (i) twenty five percent (25%) to acquire cryptocurrencies to serve as a reserve asset, and (ii) the remaining seventy five percent (75%) for working capital purposes and general corporate purposes, subject to further exceptions described in the Purchase Agreement.
As consideration for the Investor’s commitment to purchase shares of common stock in accordance with the Purchase Agreement, the Company also agreed to pay a commitment fee in an amount equal to
The Purchase Agreement also contains customary representations, warranties, covenants, conditions to each Advance, and termination provisions. The term of the Purchase Agreement is 24 months from the date of the Purchase Agreement and may be terminated upon the occurrence of specified events, including the exhaustion of the commitment amount or other customary termination events. Additionally, the Purchase Agreement may be terminated by the Company at any time without penalty.
In connection with the Purchase Agreement, also on April 10, 2026, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Investor, pursuant to which the Company agreed to file and maintain a registration statement (the “Registration Statement”) registering the resale of the shares of common stock issuable pursuant to the Purchase Agreement within thirty (30) calendar days of the date of the Registration Rights Agreement. The Company has agreed to use its best efforts to cause the Registration Statement to be declared effective as soon as practicable, but in no event later than ninety (90) calendar days of the date of the Registration Rights Agreement (subject to certain extensions).
Curvature Securities, LLC (the “Placement Agent”), acted as the placement agent in connection with the transactions contemplated by the Purchase Agreement, for which the Company has agreed to pay a cash fee, payable at each closing, equal to 3.0% of the aggregate gross proceeds raised pursuant to the Purchase Agreement and to reimburse certain expenses of the Placement Agent.
As of June 30, 2026, no sales have been made under the purchase agreement.
Other equity issuances
On April 6, 2026, at a special meeting of stockholders, the Company’s stockholders approved an amendment to the Company’s Certificate of Incorporation (the “Charter Amendment”) to increase the number of authorized shares of common stock of the Company from
| 24 |
| Table of Contents |
On May 8, 2026, the Company issued
During the six months ended June 30, 2026, the Company issued
During the six months ended June 30, 2026, the Company issued an aggregate of
Stock Options
On June 1, 2026, the Company granted
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, 2025 |
|
|
|
| $ |
|
| $ |
| |||
Granted |
|
|
|
|
|
|
|
|
| |||
Exercised |
|
| ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Expired |
|
| - |
|
|
|
|
|
|
| ||
Forfeited and cancelled |
|
| ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Outstanding at June 30, 2026 |
|
|
|
| $ |
|
| $ |
| |||
Exercisable at June 30, 2026 |
|
|
|
| $ |
|
| $ |
| |||
The weighted average remaining contractual life is approximately
Common 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, 2025 |
|
|
|
| $ |
|
| $ |
| |||
Granted |
|
| - |
|
|
|
|
|
|
| ||
Exercised |
|
| - |
|
|
|
|
|
|
| ||
Forfeited and cancelled |
|
| - |
|
|
|
|
|
|
| ||
Outstanding at June 30, 2026 |
|
|
|
| $ |
|
| $ |
| |||
Exercisable at June 30, 2026 |
|
|
|
| $ |
|
| $ |
| |||
| 25 |
| Table of Contents |
The weighted average remaining contractual life is approximately
NOTE 9 – 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 June 30, 2026 and December 31, 2025, the balances due from the joint ventures were $
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. During the six months ended June 30, 2026, the CEO paid $
No member of management has benefited from the transactions with related parties. The above transactions were not arms-length transactions.
NOTE 10 – NOTES PAYABLE
During the year ended December 31, 2020, the Company acquired domain names from a third party and owed $
On April 1, 2024, the Company received proceeds of $
On June 6, 2024, the Company entered into a promissory note as part of the acquisition of DDS Rank (the “DDS Rank Note”). The DDS Rank Note has the principal sum of $
On October 1, 2024, the Company entered into a promissory note as part of the acquisition of Eastern Standard (the “Eastern Standard Note”). The Eastern Standard Note has the principal sum of $
On February 28, 2025, the Company issued a promissory note for $
| 26 |
| Table of Contents |
On June 2, 2025, the Company received proceeds of $
At various times the Company enters into short-term financing agreements with payment service providers who provide cash proceeds. The Company will repay the principal balance based on a percentage of its daily sales processed through the service provider until the total principal is repaid, which ranges from 5% to 30%, based on the repayment terms in the agreement which is less than one year. The following table shows the outstanding balances of these lenders as of June 30, 2026:
Borrowing Entity |
| Origination Date |
| Interest rate |
|
| Original cash advanced |
|
| Balance as of June 30, 2026 |
|
| Balance as of December 31, 2025 |
| ||||
Proofread Anywhere |
| May 25, 2025 |
|
| % |
| $ |
|
| $ |
|
| $ |
| ||||
Proofread Anywhere |
| May 5, 2026 |
|
| % |
| $ |
|
| $ |
|
| $ |
| ||||
Vital Reaction |
| October 31, 2024 |
|
| % |
| $ |
|
| $ |
|
| $ |
| ||||
Vital Reaction |
| July 25, 2025 |
|
| % |
| $ |
|
| $ |
|
| $ |
| ||||
Contentellect |
| June 30, 2025 |
|
| % |
| $ |
|
| $ |
|
| $ |
| ||||
Contentellect |
| April 2, 2026 |
|
| % |
| $ |
|
| $ |
|
| $ |
| ||||
DDS Rank |
| June 28, 2025 |
|
| % |
| $ |
|
| $ |
|
| $ |
| ||||
DDS Rank |
| May 12, 2026 |
|
| % |
| $ |
|
| $ |
|
| $ |
| ||||
Onfolio Assets |
| June 28, 2025 |
|
| % |
| $ |
|
| $ |
|
| $ |
| ||||
SEO Butler |
| July 30, 2025 |
|
| % |
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total balance as of June 30, 2026 |
|
|
|
|
|
|
|
|
|
|
| $ |
|
| $ |
| ||
For the three and six months ended June 30, 2026, the Company recognized interest expense associated with the above notes of $
| 27 |
| Table of Contents |
Convertible Notes
On November 17, 2025, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with the buyer referred to in the Schedule of Buyers included therein (the “Buyers”), pursuant to which the Company agreed to sell (i) an aggregate principal amount of $6,000,000 in Senior Secured Convertible Notes (the “Senior Secured Notes”), convertible into the Company’s common stock and (ii) rights to receive Company common stock (the “Rights”) (see Note 14).
The Securities Purchase Agreement contains representations and warranties of the Company and the Buyers typical for transactions of this type. In addition, the Securities Purchase Agreement contains customary covenants on the Company’s part typical for transactions of this type.
Senior Secured Convertible Notes
Pursuant to the Securities Purchase Agreement, the Company has issued Senior Secured Convertible Notes (the “Senior Secured Notes”) in the aggregate principal amount of $
Subject to the terms and conditions of the Securities Purchase Agreement, the Company may require each Buyer to participate in one or more additional closings for the purchase by such Buyer and the sale by the Company, of (a) with respect to the First Additional Closing (as defined below), additional Senior Secured Convertible Notes in the aggregate original principal amount of $
The Senior Secured Notes were issued on November 17, 2025, subject to the satisfaction of customary closing conditions. The Senior Secured Notes are senior obligations of the Company and are secured by all personal property and assets of the Company and its subsidiaries, pursuant to a Security Agreement and a Guaranty.
The Senior Secured Notes also contain certain negative covenants, including prohibitions on the incurrence of indebtedness, liens, restrictions on redemption and cash dividends, restrictions on the transfer of assets and changes in the nature of business, as well as standard and customary events of default including, but not limited to, failure to make payments when due, failure to observe or perform covenants or agreements contained in the Senior Secured Notes, existence of a default or event of default under any of the Transaction Documents (as defined in the Securities Purchase Agreement), the bankruptcy or insolvency of the Company or any of its subsidiaries and unsatisfied judgments against the Company.
The Company failed to settle the Eastern Standard Note for common shares and failed to have an effective registration statement as specified in the convertible note agreement which cause the triggering of an event of default. As a result of the default the Company was required to pay liquidated damages totaling $
| 28 |
| Table of Contents |
As previously disclosed in the Company’s filings with the Commission, the Company and the investor signatory thereto (the “Holder”) entered into (i) that certain Securities Purchase Agreement, pursuant to which, among other things, the Company issued to the Holder (a) Senior Secured Convertible Notes and (b) the Rights, and (ii) that certain November Registration Rights Agreement, and together with the Securities Purchase Agreement, the Senior Secured Convertible Notes, the Rights, and the November Registration Rights Agreement, the “Existing Transaction Documents”).
On April 10, 2026, the Company entered into a Limited Waiver and Amendment Agreement with the Holder (the “Waiver Agreement”). The Waiver Agreement provides for specific waivers and forbearances related to existing and potential events of default under the Existing Transaction Documents, as well as amendments to the Existing Transaction Documents to accommodate the terms of the Purchase Agreement. Capitalized terms used but not defined in this description of the Waiver Agreement shall have the meaning set forth in the Waiver Agreement.
Pursuant to the Waiver Agreement, the Holder granted, among other things, the following limited waivers: (i) the Holder agreed to waive certain Asset Sale Events of Default that otherwise occurred in connection with the Company’s sale of certain assets as described in the Waiver Agreement, (ii) the Holder agreed to waive any Asset Sale Event of Default arising from the occurrence of one or more Permitted Future Asset Sales as described in the Waiver Agreement, (iii) the Holder waived its right to require a cash redemption of the Senior Secured Convertible Note, either as a result of an Event of Default under the Senior Secured Convertible Note arising from the Eastern Exchange Event of Default, or as a pro rata portion of net proceeds, in connection with the Asset Sales, (iv) the Holder agreed to forbear from exercising certain redemption rights related to the default arising from the Eastern Exchange Event of Default until September 17, 2026, and the Holder waived the application of the Default Interest Rate during such period, and (v) the Holder waived the Company’s failure to pay Registration Delay Payments relating to the Initial Registration Statement as an Event of Default, with any such Registration Delay Payments due, when and as required under the November Registration Rights Agreement, to be paid on the Maturity Date except to the extent included, in whole or in part, in the Conversion Amount of one or more conversions of the Senior Secured Convertible Note as specified in any such applicable Conversion Notice.
On May 17, 2026, the six-month anniversary of the Issuance Date, the Floor Price was adjusted in accordance with the foregoing provisions to $8.80. As a result of the events of default described above, conversions of the Senior Secured Notes have been effected at the alternate conversion price equal to 85% of the applicable lowest VWAP, subject to the Floor Price. Pursuant to the Waiver Agreement described above, the existing events of default are not capable of cure, and accordingly the alternate conversion price remains applicable for the remaining term of the Senior Secured Notes. Where the alternate conversion price so calculated would otherwise be below the Floor Price, the applicable conversion is effected at the Floor Price and an additional amount, the Alternate Conversion Floor Amount (the "Floor Penalty"), is added to the Conversion Amount and may be settled in shares of common stock in subsequent conversions.
Between May 1, 2026 and June 17, 2026, the Holder delivered ten Conversion Notices to the Company electing to convert (i) an aggregate of $
During the three and six months ended June 30, 2026, the Company recorded $
For the three and six months ended June 30, 2026, the Company recognized interest expense associated with the Convertible Notes of $
| 29 |
| Table of Contents |
Registration Rights Agreement
On November 17, 2025, the Company also entered into a registration rights agreement with the Buyers (the “November Registration Rights Agreement”), which provides, subject to certain limitations, the Buyers with certain registration rights for the shares of common stock issuable upon conversion of the Senior Secured Notes. The November Registration Rights Agreement requires the Company to prepare and file a registration statement with the U.S. Securities and Exchange Commission within 30 days after the issuance of the Senior Secured Notes to register the resale of the shares underlying the Senior Secured Notes and cause such registration statement to be declared effective within 60 days after the issuance of the Senior Secured Notes. In the event that the Company fails to file the registration statement by the prescribed deadline or such registration statement is not declared effective by the prescribed deadline or the Company fails to maintain the effectiveness of such registration statement, then the Company shall pay to each holder of registrable securities relating to such registration statement an amount in cash equal to two percent (2.0%) of such investor’s original principal amount stated in such investor’s Senior Secured Note.
The following summarizes the Company’s maturities of debt instruments:
|
| Principal |
| |
Fiscal year ended: |
|
|
| |
December 31, 2026 (6 months remaining) |
| $ |
| |
December 31, 2027 |
|
|
| |
December 31, 2028 |
|
|
| |
December 31, 2029 |
|
|
| |
December 31, 2030 and thereafter |
|
|
| |
Total loan repayments |
|
|
| |
Less interest |
|
|
| |
Total |
| $ |
| |
NOTE 11 – DERIVATIVE LIABILITIES
The fair values of the conversion option of outstanding convertible notes payable and common stock warrants were determined to be derivative liabilities under ASC 815 due to the default on convertible notes payable disclosed above, which resulted in a variable conversion price on the outstanding convertible note payable. The fair value of the derivative liabilities was estimated using a Monte-Carlo model with the following assumptions:
|
| June 30, 2026 |
|
| December 31, 2025 |
| ||
Volatility |
|
| % |
|
| % | ||
Dividend Yield |
|
| % |
|
| % | ||
Risk-free rate |
|
| % |
|
| % | ||
Expected term |
|
|
|
| ||||
Stock price |
| $ |
|
| $ |
| ||
Conversion price |
| $ |
|
| $ |
| ||
Derivative liability fair value |
| $ |
|
| $ |
| ||
Number of shares issued upon conversion, exercise, or satisfaction of required conditions |
|
|
|
|
|
| ||
All fair value measurements related to the derivative liabilities are considered significant unobservable inputs (Level 3) under the fair value hierarchy of ASC 820.
| 30 |
| Table of Contents |
The table below presents the change in the fair value of the derivative liability during the six months ended June 30, 2026:
Fair value as of December 31, 2025 |
| $ |
| |
Derivative value for liquidated damages added to principal balance of notes |
|
|
| |
Settlement of derivative upon conversion |
|
| ( | ) |
Change in fair value of derivatives |
|
|
| |
Fair value as of June 30, 2026 |
| $ |
|
The total impact of derivative liabilities recognized in the Company’s consolidated statements of operations includes the change in fair value of derivatives, with the Company recognizing a total loss of $
NOTE 12 – DEFERRED REVENUE
Deferred revenue as of June 30, 2026 and December 31, 2025 consisted of the following:
|
| June 30, 2026 |
|
| December 31, 2025 |
| ||
Website design and implementation |
| $ |
|
| $ |
| ||
Website management |
|
|
|
|
|
| ||
Advertising and content services |
|
|
|
|
|
| ||
Total deferred revenue |
| $ |
|
| $ |
| ||
Changes in the balance of deferred revenue for the periods presented are as follows:
|
| Deferred Revenue |
| |
Balance as of December 31, 2025 |
| $ |
| |
Billings for the period |
|
|
| |
Revenue recognized |
|
| ( | ) |
Balance as of June 30, 2026 |
| $ |
| |
The transaction price from revenue transactions allocated to unsatisfied performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancelable contracts that will be invoiced and recognized as revenue in future periods (“backlog”). While deferred revenue is recorded on our balance sheet as a liability, backlog is not recorded in revenue, deferred revenue or elsewhere in our consolidated financial statements until we establish a contractual right to invoice, at which point it is recorded as revenue or deferred revenue as appropriate. As of June 30, 2026, the aggregate amount of the transaction price allocated to remaining performance obligations was $
We expect that the amount of backlog relative to the total value of our contracts will change from year to year due to several factors, including the amount invoiced early in the contract term, the timing and duration of customer agreements, varying invoicing cycles of agreements and changes in customer financial circumstances. Accordingly, we believe that fluctuations in backlog are not always a reliable indicator of future revenues, and we do not utilize backlog internally as a key management metric.
| 31 |
| Table of Contents |
NOTE 13 – CONTRACTS IN PROCESS
The net unbilled accounts receivables (deferred revenues) position for contracts in process, related to the website design and implementation services, consisted of the following:
|
| June 30, |
|
| December 31, |
| ||
|
| 2026 |
|
| 2025 |
| ||
Costs on uncompleted contracts |
| $ |
|
| $ |
| ||
Estimated earnings |
|
|
|
|
|
| ||
Total costs and estimated profits on uncompleted contracts |
|
|
|
|
|
| ||
Add: unbilled amounts on completed contracts |
|
|
|
|
|
| ||
Less: Progress billings |
|
| ( | ) |
|
| ( | ) |
Unbilled accounts receivables (deferred revenues), net |
| $ |
|
| $ | ( | ) | |
The net asset (liability) position for contracts in process is included in the accompanying consolidated balance sheets as follows:
|
| June 30, 2026 |
|
| December 31, 2025 |
| ||
Unbilled accounts receivable costs and estimated earnings in excess of billings on uncompleted contracts |
| $ |
|
| $ |
| ||
Deferred revenues - Billings in excess of costs and estimated earnings on uncompleted contracts |
|
| ( | ) |
|
| ( | ) |
Unbilled accounts receivables (deferred revenues), net |
| $ |
|
| $ | ( | ) | |
NOTE 14 – COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Company may become a party to lawsuits involving various matters. The impact and outcome of litigation, if any, is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. The Company believes the ultimate resolution of any such current proceeding will not have a material adverse effect on our continued financial position, results of operations or cash flows.
On January 1, 2024, the Company entered into the RevenueZen Asset Purchase Agreement, and subject to the terms and conditions contained therein, at the closing, the Company agreed to pay additional earn-out payments that could be paid to RevenueZen pursuant to the earn-out formula described in the RevenueZen Asset Purchase Agreement.
The earn-out formula specifies for a period of one year, if the SDE of the RevenueZen business exceeds $
On February 28, 2025, the Company and the RevenueZen sellers agreed to the final earn-out amount to be $
| 32 |
| Table of Contents |
On April 1, 2024, the Company closed on its acquisition of certain customers from First Page, and subject to the terms and conditions contained in the acquisition agreement, at the closing,
On November 17, 2025 in connection with the Securities Purchase Agreement described in Note 10, the Company issued to the Buyers the Rights to Receive common stock, exercisable for the Right Amount (as defined below) in shares of common stock. The Rights shall be exercisable between November 17, 2025, and May 17, 2033. “Right Amount” means the underlying value of this Right, which initially shall be zero and shall increase on each calendar day on or after November 17, 2025, through and including, May 17, 2033, by the Right Daily Incremental Amount (as defined in the Rights) and any accrued and unpaid late charges related thereto. As of June 30, 2026 and December 31, 2025, the Company has accrued $
NOTE 15 – SUBSEQUENT EVENTS
Conversion Notices Under Senior Secured Convertible Note
Subsequent to June 30, 2026,
In addition, pursuant to the terms of the Floor Penalty, the Company incurred damages of approximately $
Subsequent to June 30, 2026 and through the date of this report the Company issued 1,576,983 shares of common stock to settle the remaining original principal balance of $
Following the application of such conversions, and the conversion of the remaining balance described above, no principal, liquidated damages or amounts accrued under the Floor Penalty remained outstanding under the Senior Secured Notes as of the date of this Report.
Sale of All Things Dogs
In July 2026, the Company, through its wholly-owned subsidiary Onfolio Assets, LLC, completed the sale of the assets of its All Things Dogs business for gross proceeds of $
Sale of Digital Assets
In July and August 2026, with the consent of the Senior Secured Noteholder, digital assets with a fair value of approximately $
| 33 |
| Table of Contents |
Nasdaq Continued Listing Matters
As previously disclosed, on May 26, 2026, the Company received a notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) stating that the Company was not in compliance with the minimum stockholders’ equity requirement of Nasdaq Listing Rule 5550(b)(1), which requires companies listed on The Nasdaq Capital Market to maintain stockholders’ equity of at least $
On July 2, 2026, the Company received a notice from Nasdaq stating that the Company was not in compliance with the minimum bid price requirement of Nasdaq Listing Rule 5550(a)(2), as the closing bid price of the Company’s common stock was below $1.00 per share for 30 consecutive business days. The Company has 180 calendar days, or until December 29, 2026, to regain compliance, which requires the closing bid price of the common stock to be at least $1.00 per share for a minimum of ten consecutive business days. On August 10, 2026, the Company completed a 1-for-50 reverse stock split of its common stock as part of its effort to regain compliance with Nasdaq Listing Rule 5550(a)(2).
Annual Meeting of Stockholders
On August 6, 2026, the Company held its annual meeting of stockholders, at which the Company’s stockholders approved, among other matters,
Reverse Stock Split
On August 10, 2026, the Company effected a 1-for-50 reverse stock split of its issued and outstanding common stock, pursuant to the authority approved by the Company’s stockholders at the special meeting of stockholders held on April 6, 2026. The total number of shares of stock which the Company shall have authority to issue remains at
| 34 |
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis should be read in conjunction with our consolidated financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management. This information should also be read in conjunction with our audited historical consolidated financial statements which are included in our Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on March 31, 2026.
Overview
Onfolio Holdings Inc. acquires controlling interests in and actively manages online businesses that we believe (i) operate in sectors with long-term growth opportunities, (ii) have positive and stable cash flows, (iii) face minimal threats of technological or competitive obsolescence and (iv) can be managed by our existing team or have strong management teams largely in place. Through the acquisition and growth of a diversified group of websites with these characteristics, we believe we offer investors in our shares an opportunity to diversify their own portfolio risk.
Onfolio Holdings Inc. was incorporated on July 20, 2020 under the laws of Delaware to acquire and develop high-growth and profitable websites. Unless the context otherwise requires, all references to “our Company,” “we,” “our” or “us” and other similar terms means Onfolio Holdings Inc., a Delaware corporation, and our wholly- and majority-owned subsidiaries.
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.
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.
The second quarter was a challenging one, with our portfolio companies focused on preserving cash flow and reducing expenses. There were standout performers, notably RevenueZen, whose results improved significantly after Eastern Standard took over management of its fulfilment, but overall portfolio performance is not yet where we need it to be. As we have discussed in recent public updates, our current portfolio on its own does not have the scale required to reach consolidated profitability. We now believe that reaching consolidated profitability requires adding profitable operations through acquisition, and management is actively pursuing several opportunities that we believe could be accretive, including where funded through our equity purchase facility.
On April 10, 2026, we entered into an equity purchase agreement with an institutional investor providing for the sale of up to $100 million of newly issued common stock, subject to the conditions described in Note 8. We believe this equity purchase facility can provide financing to grow our portfolio and support growth in our existing portfolio companies.
Management is also exploring acquisitions in which a substantial portion of the purchase price would be deferred, which could allow us to add profitable operations before accessing additional capital.
A principal focus of management is on cash and on managing our debt. Subsequent to June 30, 2026, we settled the remaining balance owed under our Senior Secured Convertible Notes, including accrued liquidated damages and Floor Penalties, through the issuance of common stock, and no principal remained outstanding under those notes as of the date of this Report (Note 15). With that indebtedness resolved, discussions regarding additional funding are ongoing.
Reverse Stock Split
On August 10, 2026, the Company effected a 1-for-50 reverse stock split of its issued and outstanding common stock, pursuant to the authority approved by the Company’s stockholders at the special meeting of stockholders held on April 6, 2026. The total number of shares of stock which the Company shall have authority to issue remains at 305,000,000 shares, consisting of (i) 300,000,000 shares of common stock, par value $0.001 per share, and (ii) 5,000,000 shares of preferred stock, par value $0.001, of which 1,000,000 shares of preferred stock remain designated as series A Preferred Stock. Unless otherwise indicated, all share and per-share amounts in these consolidated financial statements and the accompanying notes have been retroactively adjusted, for all periods presented, to give effect to the reverse stock split.
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Emerging Growth Company
We qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:
| · | have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; |
| · | comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); |
| · | submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay” and “say-on-frequency;” |
| · | disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation. |
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of our initial public offering, (ii) the last day of the first fiscal year in which our total annual gross revenues are $1.235 billion or more, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iv) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
Principal Factors Affecting Our Financial Performance
Our operating results are primarily affected by the following factors at a portfolio company level:
| · | our ability to acquire new customers or retain existing customers and grow revenue; |
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| · | our ability to offer competitive product pricing and control expenses; |
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| · | our ability to broaden product offerings; |
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| · | industry demand and competition; |
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| · | our ability to leverage technology and use and develop efficient processes; |
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| · | our ability to attract and retain talented employees; |
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| · | our ability to identify and acquire companies at reasonable prices and terms; |
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| · | our ability to reduce and control corporate overhead; and |
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| · | Our market position and market conditions, including the effects of government policies, tariffs and trade barriers. |
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Results of Operations
Three Months Ended June 30, 2026 compared to the Three Months Ended June 30, 2025
The Company reported a net loss of $4,602,551 for the three months ended June 30, 2026, compared to a net loss of $534,439 for the three months ended June 30, 2025. For the three months ended June 30, 2026, the Company’s reported a net loss includes a $280,685 non-cash loss on the change in fair value of digital assets, and a $2,948,217 non-cash loss on the change in fair value of derivative liabilities. The components of the change in net loss for the current periods are as follows:
Revenues
|
| For the Quarter Ended June 30, |
|
| $ Change from prior |
|
| % Change from prior |
| |||||||
|
| 2026 |
|
| 2025 |
|
| Year |
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| year |
| ||||
Revenue, services |
| $ | 1,218,962 |
|
| $ | 2,062,603 |
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| $ | (843,641 | ) |
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| (41 | )% |
Revenue, product sales |
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| 278,593 |
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|
| 1,085,606 |
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|
| (807,013 | ) |
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| (74 | )% |
Total Revenue |
| $ | 1,497,555 |
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| $ | 3,148,209 |
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| $ | (1,650,654 | ) |
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| (52 | )% |
Revenue decreased by $1,650,140, or 52% for the three months ended June 30, 2026 compared to 2025. The decrease is primarily due to lower revenue at our Eastern Standard subsidiary, which experienced a slowdown in new sales beginning late in the first quarter of 2026, lower digital product sales at our Proofread Anywhere subsidiary reflecting substantially reduced advertising spend, and the absence of revenue from businesses divested during 2026.
Cost of Revenue
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| For the Quarter Ended June 30, |
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| $ Change from |
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| % Change from |
| |||||||
|
| 2026 |
|
| 2025 |
|
| prior year |
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| prior year |
| ||||
Cost of revenue, services |
| $ | 731,179 |
|
| $ | 1,074,065 |
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| $ | (342,886 | ) |
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| (32 | )% |
Cost of revenue, product sales |
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| 34,373 |
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|
| 135,867 |
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|
| (101,494 | ) |
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| (75 | )% |
Total Cost of Revenue |
| $ | 765,552 |
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| 1,209,932 |
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| $ | (444,380 | ) |
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| (37 | )% |
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.
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Operating Expenses
Selling, General and Administrative
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.
Our general and administrative expenses consist primarily of consulting related expenses paid to contractors, stock-based compensation, advertising and marketing costs, and other expenses. In the near future, we expect our general and administrative expenses to continue to increase to support business growth. Over the long term, we expect general and administrative expenses to decrease as a percentage of revenue.
Professional Fees and Acquisition Costs
Professional fees increased by $209,122, or 60% during the three months ended June 30, 2026 compared to 2025, primarily due to higher legal, audit and other professional fees, with the increase concentrated at the Corporate level, including costs associated with the Company’s financing arrangements, Nasdaq listing compliance matters and strategic transaction activity.
Other Income and expense
Total other expense was $3,637,043 during the three months ended June 30, 2026, compared to other expense of $27,788 during the three months ended June 30, 2025. The increase in other expense was driven primarily by an increase in interest expense of approximately $336,000 on the outstanding notes, a $281,000 loss on the change in fair value of digital assets, a $2,950,000 loss on the change in fair value of derivative liabilities.
Business Segment Results of Operations
We operate in two business segments: Business to Business (“B2B”) and Business to Consumers (“B2C”). We organize our business segments based on the nature of products and services offered, and the economic characteristics of each segment. Following is a brief description of the activities of our business segments:
Selected Financial Data by Business Segment
Net sales and operating profit of the Company’s business segments exclude intersegment sales, cost of sales and profit as these activities are eliminated in consolidation and thus are not included in management’s evaluation of performance of each segment. Sales, cost of sales and operating profit for each of our business segments were as follows:
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| 2026 |
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| 2025 |
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Revenue |
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B2B |
| $ | 1,218,406 |
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| $ | 1,974,771 |
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B2C |
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| 279,149 |
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| 1,173,438 |
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Total revenue |
| $ | 1,497,555 |
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| $ | 3,148,209 |
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Cost of Sales |
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B2B |
| $ | 729,313 |
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| $ | 1,052,778 |
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B2C |
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| 36,239 |
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| 157,154 |
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Total Cost of Sales |
| $ | 765,552 |
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| $ | 1,209,932 |
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Operating income (loss) |
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B2B |
| $ | (102,832 | ) |
| $ | 70,173 |
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B2C |
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| 43,258 |
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| 150,261 |
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Total business segment operating income (loss) |
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| (59,574 | ) |
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| 220,434 |
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Unallocated items |
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| (905,934 | ) |
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| (726,957 | ) |
Total consolidated operating income (loss) |
| $ | (965,508 | ) |
| $ | (506,523 | ) |
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Management evaluates performance on our contracts by focusing on net sales and operating profit and not by type or amount of operating expense. Consequently, our discussion of business segment performance focuses on net sales and operating profit, consistent with our approach for managing the business. This approach is consistent throughout the life cycle of our contracts, as management assesses the bidding of each contract by focusing on net sales and operating profit and monitors performance on our contracts in a similar manner through their completion.
B2B
Our B2B segment includes the results of operations of Eastern Standard, RevenueZen, DDS Rank, SEO Butler, Contentellect, Pace Generative, and DealPipe. These entities share similar characteristics such as customers being businesses and being primarily service-related revenue.
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.
B2B incurred total operating loss of $102,832 during the three months ended June 30, 2026 compared to operating income of $70,173 in the comparable 2025 period. This was primarily due to the revenue decline at our Eastern Standard subsidiary, partially offset by improved operating results at our RevenueZen subsidiary following the integration of its fulfilment operations with Eastern Standard.
B2C
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.
B2C revenue decreased by $894,289 or 76% during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease is primarily due to lower digital product sales at our Proofread Anywhere subsidiary, reflecting substantially reduced advertising spend, and the absence of revenue from businesses divested during 2026.
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.
Six Months Ended June 30, 2026 compared to the Six Months Ended June 30, 2025
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:
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Revenues
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| For the Period Ended June 30, |
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| $ Change from prior |
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| % Change from prior |
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| 2026 |
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| 2025 |
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| Year |
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| year |
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Revenue, services |
| $ | 2,778,700 |
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| $ | 3,859,198 |
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| $ | (1,080,498 | ) |
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| (28 | )% |
Revenue, product sales |
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| 585,720 |
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| 2,100,954 |
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| (1,515,234 | ) |
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| (72 | )% |
Total Revenue |
| $ | 3,364,420 |
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| $ | 5,960,152 |
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| $ | (2,595,732 | ) |
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| (43 | )% |
Revenue decreased by $2,595,732, or 43% for the six months ended June 30, 2026 compared to 2025. The decrease is primarily due to lower revenue at our Eastern Standard subsidiary, which experienced a slowdown in new sales beginning late in the first quarter of 2026, lower digital product sales at our Proofread Anywhere subsidiary reflecting substantially reduced advertising spend, and the absence of revenue from businesses divested during 2026.
Cost of Revenue
|
| For the Quarter Ended June 30, |
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| $ Change from |
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| % Change from |
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| 2026 |
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| 2025 |
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| prior year |
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| prior year |
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Cost of revenue, services |
| $ | 1,635,548 |
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| $ | 2,086,349 |
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| $ | (450,801 | ) |
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| (22 | )% |
Cost of revenue, product sales |
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| 78,734 |
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| 228,406 |
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| (149,672 | ) |
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| (66 | )% |
Total Cost of Revenue |
| $ | 1,714,282 |
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| $ | 2,314,755 |
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| $ | (600,473 | ) |
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| (26 | )% |
Cost of revenue decreased by $600,473, or 26% for the six 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 fulfillment, content creation, website hosting and maintenance costs and the costs of acquiring new inventory products for physical product sales.
Operating Expenses
Selling, General and Administrative
General and Administrative expenses decreased by $1,824,708, or 43% during the six months ended June 30, 2026 compared to 2025. The decrease was primarily due to lower advertising and marketing costs of $1,089,000, lower stock-based compensation expense of $269,000, and lower amortization expense of approximately $238,000, 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 $229,000 was spread across compensation, contractor, and other general and administrative cost categories following the integration of our agency businesses.
Our general and administrative expenses consist primarily of consulting related expenses paid to contractors, stock-based compensation, advertising and marketing costs, and other expenses. In the near future, we expect our general and administrative expenses to continue to increase to support business growth. Over the long term, we expect general and administrative expenses to decrease as a percentage of revenue.
Professional Fees and Acquisition Costs
Professional fees increased by $401,921, or 69% during the six months ended June 30, 2026 compared to 2025, primarily due to higher legal, audit and other professional fees, with the increase concentrated at the Corporate level, including costs associated with the Company’s financing arrangements, Nasdaq listing compliance matters and strategic transaction activity.
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Other Income and expense
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.
Business Segment Results of Operations
We operate in two business segments: Business to Business (“B2B”) and Business to Consumers (“B2C”). We organize our business segments based on the nature of products and services offered, and the economic characteristics of each segment. Following is a brief description of the activities of our business segments:
Selected Financial Data by Business Segment
Net sales and operating profit of the Company’s business segments exclude intersegment sales, cost of sales and profit as these activities are eliminated in consolidation and thus are not included in management’s evaluation of performance of each segment. Sales, cost of sales and operating profit for each of our business segments were as follows:
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| For the Six Months ended June 30, |
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| 2026 |
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| 2025 |
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Revenue |
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B2B |
| $ | 2,740,234 |
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| $ | 3,668,685 |
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B2C |
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| 624,186 |
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| 2,291,467 |
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Total revenue |
| $ | 3,364,420 |
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| $ | 5,960,152 |
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Cost of Sales |
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B2B |
| $ | 1,629,826 |
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| $ | 2,035,130 |
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B2C |
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| 84,456 |
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| 279,625 |
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Total Cost of Sales |
| $ | 1,714,282 |
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| $ | 2,314,755 |
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Operating income (loss) |
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B2B |
| $ | (214,729 | ) |
| $ | 19,628 |
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B2C |
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| 140,636 |
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| 378,419 |
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Total business segment operating income (loss) |
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| (74,093 | ) |
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| 398,047 |
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Unallocated items |
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| (1,724,770 | ) |
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| (1,690,112 | ) |
Total consolidated operating income (loss) |
| $ | (1,798,863 | ) |
| $ | (1,292,064 | ) |
Management evaluates performance on our contracts by focusing on net sales and operating profit and not by type or amount of operating expense. Consequently, our discussion of business segment performance focuses on net sales and operating profit, consistent with our approach for managing the business. This approach is consistent throughout the life cycle of our contracts, as management assesses the bidding of each contract by focusing on net sales and operating profit and monitors performance on our contracts in a similar manner through their completion.
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B2B
Our B2B segment includes the results of operations of Eastern Standard, RevenueZen, DDS Rank, SEO Butler, Contentellect, Pace Generative, and DealPipe. These entities share similar characteristics such as customers being businesses and being primarily service-related revenue.
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.
B2B incurred total operating loss of $214,729 during the six months ended June 30, 2026 compared to operating income of $19,628 in the comparable 2025 period. This was primarily due to the revenue decline at our Eastern Standard subsidiary, partially offset by improved operating results at our RevenueZen subsidiary following the integration of its fulfilment operations with Eastern Standard.
B2C
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.
B2C revenue decreased by $1,667,281 or 73% during the six months ended June 30, 2026 compared to 2025. The decrease is primarily due to lower digital product sales at our Proofread Anywhere subsidiary, reflecting substantially reduced advertising spend, and the absence of revenue from businesses divested during 2026.
B2C incurred total operating income of $140,636 during the six months ended June 30, 2026 compared to $378,419 in the comparable 2025 period, with the decrease primarily due to the decrease in sales from the Proofread Anywhere subsidiary.
Liquidity and Capital Resources
Our primary source of operating cash inflows are payments from portfolio companies. In addition, the Company has raised $1,700,000 pursuant to a private offerings of Series A preferred stock and approximately $1,000,000 of common stock private offerings through June 30, 2026, $1,500,000 in notes payable and repaid $2,164,498 on its acquisition notes.
Our Company’s recurring losses from operations and negative cash flows from operations and our need to raise additional funding to finance our operations raise substantial doubt about our ability to continue as a going concern. Accordingly, management and our auditor have concluded that substantial doubt exists regarding our ability to continue as a going concern. Our audited financial statements contained in our Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission on March 31, 2026 were prepared on a going concern basis, and contemplated the realization of assets and satisfaction of liabilities in the ordinary course of business. We believe that our cash and cash equivalents as of June 30, 2026, and the future operating cash flows of the entity may not provide adequate resources to fund ongoing cash requirements for the next twelve months. If sources of liquidity are not available or if we cannot generate sufficient cash flow from operations during the next twelve months, we may be required to obtain additional sources of funds through additional operational improvements, capital market transactions, asset sales or financing from third parties, a combination thereof or otherwise. We cannot provide assurance that these additional sources of funds will be available or, if available, would have reasonable terms. If we are unable to obtain sufficient funding, our business, prospects, financial condition and results of operations will be materially and adversely affected, and we may be unable to continue as a going concern.
Cash used in operating activities
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.
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Cash used in investing activities
The Company had no investing activities during the six months ended June 30, 2026 and 2025.
Cash provided by financing activities
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
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors
Contractual Obligations
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.
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.
Critical Accounting Policies
The following are the Company’s critical accounting policies:
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 JVII, LLC (“JVII”) and OnFolio JVIII, LLC (“JVIII”) are accounted for under the cost method. All investments are subject to our impairment review policy.
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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 advertising 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.
The Company, through its subsidiary Onfolio Management LLC, is the manager of Onfolio Agency SPV, LLC (“OA SPV”), and Onfolio Agency SPV 2, LLC (“OA SPV 2”), collectively referred to as “OA SPVs”. The Company does not hold any equity interest in OA SPVs, but will receive 10% of any cash distributions paid by OA SPV, and 20% of any cash distributions paid by OA SPV 2, to its members, when declared, as the management fee. The Company can be removed as manager of OA SPVs through a unanimous vote of the members. The Company determined that the fees it may receive for its role as manager do not constitute a variable interest in OA SPVs and will be accounted for as a revenue contract under ASC 606.
The Company, through its subsidiary RevenueZen, LLC, is the manager of CliAquire, LLC (“CliAquire”). The Company holds a 5% members interest in CliAquire and will receive profit distributions based on its membership interest. The Company can be removed as manager of CliAquire through a supermajority vote of the members. The Company determined that the investment in CliAquire will be accounted for as a cost method investment.
Digital Assets
The Company’s digital assets include Bitcoin, the native cryptocurrency on the Bitcoin blockchain (“BTC”), Ether, the native cryptocurrency of the Ethereum blockchain (“ETH”), and Solana, the native cryptocurrency of the Solana blockchain (“SOL”). From time to time, the Company may also hold minor amounts of other digital tokens, which are not individually material.
Crypto assets within the scope of ASC 350-60 Intangibles—Goodwill and Other—Crypto Assets (“ASC 350-60):
BTC, ETH, and SOL tokens have been determined to fall within the scope of ASC 350-60. The Company reflects crypto assets held at fair value on the consolidated balance sheets within the Digital Assets line item. Changes in the fair value of crypto assets are recognized in income, reflected within the digital asset gains and losses within the consolidated statement of operations. The purchases and disposals of digital assets are presented as non-cash investing activities on the consolidated statement of cash flows.
In determining the fair value of digital assets in accordance with ASC 820, Fair Value Measurement (“ASC 820”), the Company utilizes BitGo as the principal market and for pricing in determining the fair value of its digital asset holdings. The Company uses a first-in, first-out methodology to assign costs to digital assets. The fair value of digital assets are considered a level 1 fair value measurement.
Custodian Risk
The Company’s Digital Assets are held with a single third-party custodian, BitGo, which we selected based on various factors, including their financial strength and industry reputation. Custodian risk refers to the potential loss, theft, or misappropriation of our Bitcoin assets due to operational failures, cybersecurity breaches, or financial difficulties experienced by these third parties. Although we periodically monitor the financial health, insurance coverage, and security measures of our custodians, reliance on such third parties inherently exposes us to risks that we cannot fully mitigate.
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Native Staking
The Company utilized one third-party asset manager to manage and stake ETH and SOL on its behalf as of June 30, 2026. Under these arrangements, the Company’s ETH and SOL is held by a qualified custodian and staked in the Ethereum and Solana protocol through a third-party validator operator (e.g., BitGo). The validator operator manages the staking process and delegates the Company’s ETH and SOL to network validators. When selected by the networks, these validators earn staking rewards and transaction fees proportional to the amount of stake delegated.
ETH and SOL used in native staking is retained on the Company’s balance sheet as a crypto asset measured at fair value in accordance with ASC 350-60. The Company does not derecognize ETH and SOL when participating in native staking because it retains the ability to direct the use of the asset and obtain substantially all benefits.
The validator operator (e.g., BitGo) is not considered a customer under ASC606 as the service provided to BitGo does not represent an output as part of the entity’s ordinary operating strategy. As such the earnings are recorded as other income in the statement of operations.
Earnings from native staking is recognized at the end of each daily period, when the Company’s right to staking rewards becomes determinable (i.e., when the constraint is lifted). The amount recognized as earnings is measured at the fair value of rewards at contract inception for that day, net of validator commissions, in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”) and ASC 820. Rewards represent noncash consideration and are measured using quoted prices in the principal market at contract inception. Subsequent changes in the fair value of ETH and SOL after initial recognition are recorded as unrealized gains or losses.
Revenue Recognition
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.
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 |
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.
Long-lived Assets
Property and equipment are stated on the basis of historical cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. Major renewals and improvements are capitalized, while minor replacements, maintenance and repairs are charged to current operations.
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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.
Non-GAAP Financial Measures
We present below certain financial information based on our EBITDA and EBITDA As Defined. References to “EBITDA” mean earnings before interest, taxes, depreciation and amortization, and references to “EBITDA As Defined” mean EBITDA plus, as applicable for each relevant period, certain adjustments as set forth in the reconciliations of net income to EBITDA and EBITDA As Defined and the reconciliations of net cash provided by operating activities to EBITDA and EBITDA As Defined presented below.
Neither EBITDA nor EBITDA As Defined is a measurement of financial performance under U.S. GAAP. We present EBITDA and EBITDA As Defined because we believe they are useful indicators for evaluating operating performance and liquidity.
Our management believes that EBITDA and EBITDA As Defined are useful as indicators of liquidity because securities analysts, investors, rating agencies and others use EBITDA to evaluate a company’s ability to incur and service debt.
In addition to the above, our management uses EBITDA As Defined to review and assess the performance of the management team in connection with employee incentive programs and to prepare its annual budget and financial projections. Moreover, our management uses EBITDA As Defined to evaluate acquisitions.
Although we use EBITDA and EBITDA As Defined as measures to assess the performance of our business and for the other purposes set forth above, the use of these non-GAAP financial measures as analytical tools has limitations, and you should not consider any of them in isolation, or as a substitute for analysis of our results of operations as reported in accordance with U.S. GAAP. Some of these limitations are:
| · | neither EBITDA nor EBITDA As Defined reflects the significant interest expense, or the cash requirements, necessary to service interest payments on our indebtedness; |
| · | although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and neither EBITDA nor EBITDA As Defined reflects any cash requirements for such replacements; |
| · | the omission of the substantial amortization expense associated with our intangible assets further limits the usefulness of EBITDA and EBITDA As Defined; |
| · | neither EBITDA nor EBITDA As Defined includes the payment of taxes, which is a necessary element of our operations; and |
| · | EBITDA As Defined excludes the cash expense we have incurred to integrate acquired businesses into our operations, which is a necessary element of certain of our acquisitions. |
Because of these limitations, EBITDA and EBITDA As Defined should not be considered as measures of discretionary cash available to us to invest in the growth of our business. Management compensates for these limitations by not viewing EBITDA or EBITDA As Defined in isolation and specifically by using other U.S. GAAP measures, such as net income, net sales and operating profit, to measure our operating performance. Neither EBITDA nor EBITDA As Defined is a measurement of financial performance under U.S. GAAP, and neither should be considered as an alternative to net income or cash flow from operations determined in accordance with U.S. GAAP. Our calculation of EBITDA and EBITDA As Defined may not be comparable to the calculation of similarly titled measures reported by other companies.
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The following table sets forth a reconciliation of net income to EBITDA and EBITDA As Defined:
|
| For the Six months ended June 30, 2026 |
|
| For the Six months ended June 30, 2025 |
| ||
Net loss |
| $ | (7,175,162 | ) |
| $ | (1,340,867 | ) |
Interest expense, net |
|
| 1,381,946 |
|
|
| 173,322 |
|
Taxes |
|
| - |
|
|
| - |
|
Depreciation and amortization expense |
|
| 364,609 |
|
|
| 603,081 |
|
EBITDA |
|
| (5,428,607 | ) |
|
| (564,464 | ) |
Change in fair value of digital assets |
|
| 954,842 |
|
|
| - |
|
Change in fair value of contingent consideration |
|
| 20,107 |
|
|
| (70,712 | ) |
Change in fair value of derivative liabilities |
|
| 3,019,609 |
|
|
| - |
|
Impairment of equity and cost method investments |
|
| 129,007 |
|
|
| - |
|
Stock-based compensation (1) |
|
| 30,047 |
|
|
| 298,943 |
|
EBITDA As Defined |
| $ | (1,274,995 | ) |
| $ | (336,233 | ) |
(1) | Represents the compensation expense recognized under our stock option plans and deferred compensation plans. |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2026, the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is accumulated and communicated to a company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Based on the evaluation of our disclosure controls and procedures as of June 30, 2026, our management, with the participation of our principal executive officer and principal financial officer has concluded that, based on such evaluation, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were not effective due to the material weakness described below. However, our management, including our principal executive officer and principal financial officer, has concluded that, notwithstanding the identified material weakness in our internal control over financial reporting, the financial statements in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.
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Material Weakness in Internal Controls Over Financial Reporting
We identified a material weakness in our internal control over financial reporting that exists as of June 30, 2026. 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:
| · | The Company has a limited number of accounting and financial reporting personnel, which restricts its ability to maintain adequate segregation of duties across its financial reporting processes. This lack of segregation of duties is a pervasive control deficiency that contributes to the specific material weaknesses described below. |
| · | The design and maintenance of controls over the accounting for website design and implementation and website management revenues was ineffective. These control deficiencies resulted in immaterial adjustments to the consolidated financial statements. |
Notwithstanding the material weaknesses in our internal control over financial reporting, we have concluded that the consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.
Management’s Plan to Remediate the Material Weakness
With the oversight of senior management, management is working towards remediation of these weaknesses in 2026 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.
Changes in Internal Control
There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.
ITEM 1A. RISK FACTORS.
In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A. Risk Factors in our 2025 Form 10-K, as filed with the SEC on March 31, 2026, which could materially affect our business, financial condition or future results. The risks described in this Form 10-Q and in our 2025 Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition or future results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
We are not in compliance with certain of Nasdaq’s continued listing requirements, and additional recently effective Nasdaq rules provide for immediate delisting with no compliance period. If we are unable to regain and maintain compliance, our common stock and warrants will be delisted from Nasdaq.
On May 26, 2026, we received a notice from the Listing Qualifications Department of Nasdaq stating that we were not in compliance with the minimum stockholders’ equity requirement of Nasdaq Listing Rule 5550(b)(1), which requires listed companies to maintain stockholders’ equity of at least $2,500,000. We submitted a plan to regain compliance, which remains under review by Nasdaq. There can be no assurance that Nasdaq will accept our plan or grant us an extension period, or that we will be able to regain compliance with the stockholders’ equity requirement within any extension period granted.
On July 2, 2026, we received a notice from Nasdaq stating that we were not in compliance with the minimum bid price requirement of Nasdaq Listing Rule 5550(a)(2), as the closing bid price of our common stock was below $1.00 per share for 30 consecutive business days. We have until December 29, 2026 to regain compliance, which requires the closing bid price of our common stock to be at least $1.00 per share for a minimum of ten consecutive business days. On August 10, 2026, the Company completed a 1-for-50 reverse stock split of its common stock as part of its effort to regain compliance with Nasdaq Listing Rule 5550(a)(2). We previously received a similar notice in January 2026 and organically regained compliance on April 30, 2026. There can be no assurance that we will regain compliance on this occasion or that we will remain in compliance thereafter.
Further, effective July 22, 2026, the U.S. Securities and Exchange Commission initially approved changes to Nasdaq Listing Rules 5550(a)(6) and 5810(c)(1), creating an immediate Staff Delisting Determination with no compliance period if a company’s Market Value of Listed Securities (“MVLS”) stays below $5,000,000 for 30 consecutive business days. Under those specific rules, an appeal or request for a review hearing would not have automatically stayed the suspension of trading. Following petitions for review, the U.S. Securities and Exchange Commission issued a letter on July 29, 2026, staying the July 22 approval order “until the Commission orders otherwise,” which temporarily puts the implementation of the rule on hold. There can be no assurance that the stay will remain in effect and that the approved changes to Nasdaq Listing Rules 5550(a)(6) and 5810(c)(1) will not ultimately be implemented. If the stay does not remain in effect and the Company’s MVLS stays below $5,000,000 for 30 consecutive business days, we will be subject to an immediate Nasdaq Staff Delisting Determination with no compliance period.
If our common stock and warrants were delisted from Nasdaq, we would expect trading, if any, to occur on an over-the-counter market, which would likely reduce the liquidity and market price of our common stock, impair our ability to raise capital, including under the Equity Purchase Facility Agreement, reduce the number of investors willing or able to hold or acquire our securities, and could have adverse consequences under our existing financing arrangements. Delisting could also impair our ability to pursue a strategic transaction, such as a reverse merger or similar business combination.
Our recent 1-for-50 Reverse Stock Split may not ensure compliance with Nasdaq’s continued listing standards, and our failure to maintain a $1.00 minimum bid price could lead to immediate delisting.
While the primary objective of our recent 1-for-50 reverse stock split was to increase the per-share market price of our common stock to meet the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2), we cannot guarantee that the market price after the split will remain above the $1.00 threshold. Under recent Nasdaq rule amendments, Nasdaq has accelerated delisting timelines and restricted the frequency of reverse splits used to cure bid price deficiencies. If our share price drops below $1.00 again, we face a more restricted path to recovery, eliminating our ability to easily implement successive splits.
Further, our 1-for-50 reverse stock split does not increase our stockholders’ equity and does not increase the aggregate market value of our listed securities, and therefore would not, by itself, address the deficiencies under the above-described Nasdaq Listing Rules 5550(b)(1) or 5550(a)(6) (applicable only if the existing stay does not remain in effect). Consequently, if we do not timely cure such deficiency(ies), we will be subject to rapid trading suspension and immediate delisting.
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Our recent 1-for-50 Reverse Stock Split has significantly expanded our pool of authorized but unissued shares, exposing our existing shareholders to substantial and immediate dilution.
Because our recent 1-for-50 reverse stock split reduced our outstanding shares without proportionally reducing the total number of authorized shares of common stock under our certificate of incorporation, the split has created a significant disparity between our outstanding and authorized share pools. This structural change provides our Board of Directors with an increased volume of unissued, available shares. Subject to applicable Nasdaq Listing Rules, our Board can issue these shares at its discretion for future equity financings, debt conversions, strategic acquisitions, or stock incentive plans without requiring further shareholder approval. Any future issuances of our common stock will result in immediate dilution to the ownership percentages, voting power, and earnings per share of our current stockholders. Frequent or large equity raises could place persistent downward pressure on our post-split share price, potentially eliminating the price gains achieved by the 1-for-50 reverse stock split.
We have incurred operating losses since our inception and we may continue to incur substantial operating losses for the foreseeable future.
We were incorporated on July 20, 2020, and have conducted operations since May 2019. We have incurred operating losses and experienced negative cash flow since our inception. We incurred a net loss of $2,540,368 for the year ended December 31, 2025 and $7,175,162 for the six months ended June 30, 2026. We anticipate that we will continue to incur operating losses through at least 2026.
We may not be able to generate sufficient revenue from owning and/or managing our online businesses to achieve profitability. We expect to continue to make significant operating and capital expenditures for acquisitions of online businesses, technologies, or other assets; and for marketing, working capital and general corporate purposes. As a result, we will need to generate significant revenue to achieve profitability. We cannot assure you that we will ever achieve profitability.
Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern.
As described in Note 3 of our audited financial statements contained in our Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission on March 31, 2026, our auditors have issued a going concern opinion on our December 31, 2025 financial statements, expressing substantial doubt that we can continue as an ongoing business for the next twelve months after issuance of their report based on our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our 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 financing, debt financing and/or related party advances, however there is no assurance of additional funding being available. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. If we cannot raise the necessary capital to continue as a viable entity, we could experience a material adverse effect on our business and our stockholders may lose some or all of their investment in us.
We can provide no assurances that any additional sources of financing will be available to us on favorable terms, if at all. Our forecast of the period of time through which our current financial resources will be adequate to support our operations and the costs to support our general and administrative and acquisition activities are forward-looking statements and involve risks and uncertainties.
If we do not succeed in raising additional funds on acceptable terms, we could be forced to delay or curtail potential acquisitions of online businesses, technologies, or other assets, forego sales and marketing efforts, and forego potential attractive business opportunities. Unless we secure additional financing, we will be unable to continue to execute on our business plan.
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We require additional capital to support our present business plans and our anticipated business growth, and such capital may not be available on acceptable terms, or at all, which would adversely affect our ability to operate.
We will require additional funds to further develop our business plan. Based on our current operating plans, we believe we need to make additional acquisitions of online businesses, technologies, or other assets to generate enough cashflow to carry our overhead costs. We may choose to raise additional capital in order to expedite and propel growth more rapidly. We can give no assurance that we will be successful in raising any additional funds. Additionally, if we are unable to generate sufficient revenues from our sales and operating activities, we may need to raise additional funds, doing so through debt and equity offerings, in order to meet our expected future liquidity and capital requirements, including capital required for operations. Any such financing that we undertake will likely be dilutive to current stockholders.
We intend to continue to make investments to support our business growth, including acquiring additional online businesses, technologies, or other assets. In addition, we may also need additional funds to respond to other business opportunities and challenges, including our ongoing operating expenses, protecting our intellectual property, satisfying debt and series A preferred stock payment obligations, and enhancing our operating infrastructure. While we may need to seek additional funding for such purposes, we may not be able to obtain financing on acceptable terms, or at all. In addition, the terms of our financings may be dilutive to, or otherwise adversely affect, holders of our common stock. We may also seek to raise additional funds through arrangements with collaborators or other third parties. We may not be able to negotiate any such arrangements on acceptable terms, if at all. If we are unable to obtain additional funding on a timely basis, we may be required to curtail or terminate some or all our business plans.
We cannot predict our future capital needs and we may not be able to secure additional financing.
We will need to raise additional funds in the future to fund our working capital needs and to fund further expansion of our business. We may require additional equity or debt financings, collaborative arrangements with corporate partners or funds from other sources for these purposes. No assurance can be given that necessary funds will be available for us to finance our development on acceptable terms, if at all. Furthermore, such additional financings may involve substantial dilution of our stockholders or may require that we relinquish rights to certain of our technologies or products. In addition, we may experience operational difficulties and delays due to working capital restrictions. If adequate funds are not available from operations or additional sources of financing, we may have to delay or scale back our growth plans.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
On November 17, 2025, the Company entered into the Securities Purchase Agreement whereby the Company issued the Senior Secured Notes and the Rights, and entered into the November Registration Rights Agreement, collectively the “Senior Secured Notes Transaction Documents”. Capitalized terms used but not defined herein shall have the meaning set forth in the Senior Secured Notes Transaction Documents.
The Senior Secured Notes Transaction Documents contain certain covenants that we did not meet, which caused the triggering of certain events of default as more fully described in the Senior Secured Notes Transaction Documents. Our breach of such covenants included our failure to settle our Eastern Standard Note for common shares (the “Eastern Standard Asset Sale Event of Default”), our failure to have a registration statement covering the shares of common stock underlying the Senior Secured Notes declared effective within a certain timeframe (the “Registration Default”), and our failure to pay to the Senior Secured Noteholders a percentage of net proceeds received pursuant to the sale of certain assets (the “Mighty Deals Asset Sale Event of Default”).
As a result of the defaults described above, the Senior Secured Noteholders are entitled to: (i) redeem all, or any portion, of the Senior Secured Notes in cash at any time, (ii) adjust the conversion price of the Senior Secured Notes from the initial $0.984 per share, subject to adjustment, to an alternate conversion price, which shall remain in effect during the occurrence and continuance of an event of default, which is equal to 85% of the lowest VWAP of our common stock of any trading day during the twenty (20) consecutive trading day period ending and including the trading day immediately preceding the delivery or deemed delivery of the applicable conversion notice, (iii) approximately $412,000 in liquidated damages, and (iv) 62.5% of the net proceeds from the sale of our Mightydeals.com business. All conversions of the Senior Secured Notes to date have been effected at the alternate conversion price described in clause (ii) above, as further described in Notes 10 and 15. As of the date of this Report, the Senior Secured Noteholders had not required cash redemption of the Senior Secured Notes, and the liquidated damages referred to in clause (iii) above were settled as part of the August 2026 agreement described in Note 15.
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On April 10, 2026, the Company entered into a Limited Waiver and Amendment Agreement with the Senior Secured Noteholders (the “Waiver Agreement”). The Waiver Agreement provides for specific waivers and forbearances related to existing and potential events of default under the Senior Secured Notes Transaction Documents, as well as amendments to the Existing Transaction Documents. Capitalized terms used but not defined in this description of the Waiver Agreement shall have the meaning set forth in the Waiver Agreement.
Pursuant to the Waiver Agreement, the Senior Secured Noteholders granted, among various other things, the following limited waivers relating to the defaults described above: (i) the Holder agreed to waive the Mighty Deals Asset Sale Event of Default, (ii) the Holder waived its right to require a cash redemption of the Senior Secured Convertible Note, either as a result of an Event of Default under the Senior Secured Convertible Note arising from the Eastern Standard Asset Sale Event of Default, or as a pro rata portion of net proceeds, in connection with the Mighty Deals Asset Sale Event of Default, (iii) the Holder agreed to forbear from exercising certain redemption rights related to the default arising from the Eastern Standard Asset Sale Event of Default until September 17, 2026, and the Holder waived the application of the Default Interest Rate during such period, and (iv) the Holder waived the Company’s failure to pay Registration Delay Payments relating to the Registration Default, with any such Registration Delay Payments due, when and as required under the November Registration Rights Agreement, to be paid on the Maturity Date except to the extent included, in whole or in part, in the Conversion Amount of one or more conversions of the Note as specified in any such applicable Conversion Notice. See Note 10 – “Notes Payable” to the financial statements herein for a discussion of the Senior Secured Notes Transaction Documents and the Waiver Agreement, and Note 15 – “Subsequent Events” for a discussion of subsequent conversions and related matters.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
Trading Arrangements
During the three months ended June 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5- 1(c) under the Exchange Act or any “non-Rule 10b5-1 arrangement” as defined in Item 408(c) of Regulation S-K.
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ITEM 6. EXHIBITS.
The following exhibits are included herein:
Exhibit No. |
| Description of Exhibit |
| Certificate of Amendment of Certificate of Incorporation - May 8, 2026 | |
| Certificate of Amendment of Certificate of Incorporation – August 10, 2026 | |
| Form of Equity Purchase Facility Agreement, dated as of April 10, 2026 | |
| Form of Registration Rights Agreement, dated as of April 10, 2026 | |
| Form of Waiver and Amendment Agreement, dated as of April 10, 2026 | |
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101.INS* |
| Inline XBRL Instance 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) |
* Filed herewith.
**Furnished herewith.
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SIGNATURES
Pursuant to the requirements 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. |
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Date: August 19, 2026 | By: | /s/ Dominic Wells |
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| Dominic Wells Chief Executive Officer (Principal Executive Officer) |
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Date: August 19, 2026 | By: | /s/ Adam Trainor |
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| Adam Trainor Chief Financial Officer (Principal Financial and Accounting Officer) |
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