Onfolio Holdings Inc.

Good morning, and welcome to the Onfolio Holdings First Quarter 2026 Earnings Conference Call. Joining us today are Dominic Wells, Chief Executive Officer, and Adam Treanor, Chief Operating Officer and Interim Chief Financial Officer. Before we begin, I would like to remind everyone that certain statements made during this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied. Forward-looking statements are based on management's current expectations as of today's date, and the company undertakes no obligation to update or revise any such statements. For a detailed description of risk and uncertainties, please refer to the risk factor section of the company's most recent Form 10-Q filed with the SEC. Additionally, during this call, management may reference certain non-GAAP financial measures and supplemental operating metrics as indicators of performance. These measures should not be considered in isolation or as substitutes for GAAP results. A reconciliation of non-GAAP measures to the most comparable GAAP measures is available on the company's SEC filings, which can be found on the company's website at investors.onfolio.com forward slash filings. And with that, I'll turn the call over to Dominic Wells.

Thank you and good morning, everyone. We appreciate you joining us today. Before we dive into the quarter and our operational highlights, I wanted to provide a quick overview of who we are at Onfolio Holdings. We are an owner-operator of cash-generating digital businesses, primarily in B2B marketing agencies and B2C online education. Since our IPO in 2022, we have grown revenues from approximately $2 million to $10.7 million in full year 2025. roughly a 5x increase entirely through acquiring and operating real businesses that generate real cash flow. As I discussed on our last conference call, we spent 2023 and 2024 building our initial portfolio. Then at the beginning of 2025, we deliberately paused our acquisition strategy to focus on getting our existing portfolio to a point where it could fund parent company costs As we closed out 2025, we made significant strides in achieving consistent profitability, but we recognized we were not quite there and needed to turn our acquisition machine back on. While we have turned more of our attention to acquisitions, including our recently announced financing, which I'll address momentarily, that does not mean we have stopped building upon our operational momentum and optimizing our current portfolio of companies. In fact, we continue to make progress in Q1, enhancing various business models across our portfolio. This resulted in shedding some unprofitable revenue lines, producing a near-term decline in overall revenue, but greatly increasing operating efficiency and profitability, giving us a more profitable foundation to grow revenue from. So let's dive further into progress made during the quarter in our two segments, B2B and B2C. We continue to see success with our new agency co-structure that I introduced on our last call. As a reminder, we have now begun treating our agencies as a unified platform in an effort to create centralized backend fulfillment, shared sales and marketing infrastructure, and clear accountability across the portfolio. We believe it makes our agency businesses more durable and positions them for the changes AI is bringing to agency work. During Q1, we made significant progress with this strategy that we believe will result in notable profitability growth in the current courses. While our revenue for this segment declined approximately 10% year over year, this was an intentional repositioning, specifically with our revenues and portfolio company, which we began restructuring in late 2025 as the business was running at approximately 8% operating margins. The service was solid, the clients were happy, but the cost structure was heavier than it needed to be. We did two things. First, we consolidated revenues and operational overhead under Eastern Standard, our largest agency and the anchor of the B2B agency platform. Second, we didn't replace departed team members with new hires. Toward the end of 2025, two senior leaders moved on from the company, and instead of replacing them, we rebuilt the core operational processes using AI. The team rethought how content gets produced, how client reporting works, and how campaigns get managed, and the result was a structural reduction in manual overhead and significantly faster turnaround on new business proposals. As a result, operating expenses dropped by over 40%, and the business is now running at approximately 15% operating margins, nearly double where it started, while service delivery quality held. The operational playbook we developed here is now being deployed across additional portfolio companies. The pattern is straightforward. Consolidate operational overhead across portfolio companies rather than running duplicate infrastructure. Rebuild processes with AI rather than hiring to fill gaps and focus the team on revenue generating activities rather than manual overhead. We believe this is what an AI native operating model looks like in practice. In our B2C segment, as we discussed during our last call, we deliberately pulled back ad spend at Proofread Anywhere, where returns have started to compress. Q1 reflects that decision. By cutting advertising spend by more than 80% year over year at Proofread Anywhere, we held the majority of prior year operating profit on roughly one third of the prior year revenue and net operating margin at the business expanded by approximately 800 basis points. Vital Reaction, our other B2C property, turned modestly profitable on the quarter after losses in the prior year period. As we rebuild the revenue base, we're applying the same playbook I described for our B2B segment. Media buying, ad creative production, and email marketing are now consolidated across both B2C properties, and we're putting AI to work in each of those workflows. The goal is to bring paid advertising back at meaningfully better unit economics than before. We believe Q1 is the trough for B2C revenue, and we've already started rebuilding from that base. Now, I wanted to touch on a key development post-Q1. In April, we secured a new $100 million equity facility to further accelerate our acquisition strategy. As I just spoke to, we spent 2025 closing the gap to profitability, and now we're deploying capital to grow. This facility is another tool in our growing capital toolkit It gives us more optionality to move aggressively on acquisitions, plugging each one into the AI infrastructure we've built while continuing to compound through both our operating businesses and our digital asset treasury. The way we think about it internally is straightforward. We are buying online businesses at three to four times free cash flow in a market that is too small for institutional private equity to compete in. We then lay out our AI operating playbook on top of those businesses to expand margins. as we did with RevenueZen. From this, every dollar of capital we deploy through this facility is intended to translate into multiple dollars of intrinsic value per share. The arithmetic works, provided we continue to maintain capital discipline. It is also worth noting that this facility is discretionary. We're not obliged to draw it. We control the timing, the amount, and the use of proceeds. We will only issue equity when we have a specific accretive use of the capital, primarily acquisition that immediately add cash flow, with a smaller portion allocated to growing our digital asset reserve. If conditions are not right, we don't draw. That is a meaningful protection for shareholder value. And lastly, before I turn it over to Adam to walk through the financials, I wanted to highlight that we officially regained compliance with NASDAQ's minimum bid price requirement on May 1st, 2026. Maintaining our NASDAQ listing is foundational to everything we're building. With compliance restored and our recently announced 100 million equity facility in place, we remain committed to executing our AI-powered acquisition and growth strategy and continuing to compound value across our portfolio. With that, I'll now turn the call over to Adam to walk through our financial results for Q1 2026. and then I'll return with more context on our plans for the remainder of the year. Adam, over to you.

Thanks, Tom. Glad to be speaking with you all today. Unless otherwise noted, all comparisons are first quarter 2026 versus first quarter 2025. Starting with our P&L, total revenue for the first quarter of 2026 was $1.9 million, a decrease of 34% from 2.8 million in the first quarter of 2025. Revenue from services, primarily our B2B segment, was $1.6 million, a decrease of about 10% from $1.8 million in the prior year period. As Don described, this primarily reflects the intentional repositioning of revenue zone, where we consolidated operational overhead under Eastern Standard and rebuilt core processes using AI, partially offset by continued growth at Eastern Standard and a new contribution from our PACE generative subsidiary, which did not exist in the comparable period. Revenue from product sales, primarily our B to C segment, was $307,000 compared to a million in the prior year period. The decline reflects the deliberate ad spend pullback at Pruford Anywhere that we initiated in the second half of 2025 to preserve unit economics, as well as lower contribution from vital reaction in the period. Gross profit for the first quarter was 0.9 million compared to 1.7 million in the prior year period. Gross margin was approximately 49% compared to 61% in the first quarter of 2025. The margin contraction primarily reflects the shift in revenue mix, as higher margin digital product sales declined as a percentage of total revenue. As our agency platform continues to deliver on the AI-driven operating leverage Dom described, and as our B2C business has normalized, we still expect gross margin to trend into the mid-60% range over the course of 2026. Total operating expenses were $1.8 million, a decrease of 30% from $2.5 million in the prior year period. Within that, selling, generative, and administrative expenses decreased $901,000, or 41%, to $1.32 million. The decrease was driven primarily by lower advertising and marketing costs, with the remainder spread across compensation, contractor, and other G&A categories. This is the agency code and AI-native operating model showing up in the financials. Professional fees did increase to $431,000, primarily driven by higher legal and audit fees related largely to our recent capital markets activity. Loss from operations was 833,000, essentially flat compared to the prior year period, despite the revenue decline, reflecting the meaningful operating expense reductions. Net loss for the first quarter of 2026 was 1.9 million, compared to a net loss of 0.9 million in the prior year period. This figure includes approximately $365,000 in non-cash expenses, a $674,000 non-cash loss on a change in fair value of digital assets, and a $71,000 non-cash loss in a change in fair value of derivative liabilities. None of those latter two items had a comparable amount in the prior year period. They relate to the convertible note facility we opened in November 2025 and mark-to-market movements in our digital asset holdings during the quarter. We also recorded approximately $218,000 of additional interest expense year over year as a result of higher note balances. Excluding those non-cash items, the underlying operating performance is more consistent with the prior year than the headline number suggests. As a reminder, we believe portfolio operating profit is a non-gap metric that most directly reflects the health and trajectory of our businesses. On a trailing 12-month basis, portfolio operating profit was a loss of approximately $1.6 million. compared to a loss of approximately $1.2 million in the prior trillion 12-month period. The reported comparison reflects approximately $440,000 of non-cash impairments we took during 2025 on legacy joint venture investments. Excluding those one-time impairments, portfolio operating profit was modestly improved year over year, despite the deliberate revenue actions we took during the year, including the revenues on restructuring on the B2B side and the ad spend pullback approved for Dennyware. We expect both of those actions to support expanding portfolio profitability over the course of 2026. Turning to our balance sheet, as of March 31st, 2026, we had cash of $842,000 compared to $2.2 million at year-end 2025. The decline reflects normal operating uses, payment of accrued preferred dividends, scheduled debt service, and the absence of any new financing inflows as our $100 million equity facility was entered into post-quarter end. Our digital asset holdings had a total fair value of approximately $1.6 million a quarter end, compared to $2.3 million at year-end 2025. The decline was driven almost entirely by mark-to-market price movements and is reflected in the $674,000 non-cash loss I mentioned earlier. Our current holdings consist of 5.32 Bitcoin, approximately 320 Ethereum, of which approximately 288 are staked, and approximately 6,888 Solana, all of which are staked. These holdings continue to generate staking rewards. We received approximately $15,000 in staking rewards during the quarter, plus approximately $11,000 in digital assets received in settlement of customer accounts receivable. We continue to view these holdings as a long-term balance sheet asset rather than a trading position. On debt, total outstanding indebtedness was $7.7 million compared to $7.8 million at year end. The slight decrease primarily reflects a reduction in deferred revenue and scheduled paydowns of notes payable. Notes payable to related parties, primarily our Eastern Standard revenues and seller notes and certain related party advances, totaled approximately $1.3 million across current and long term, down from approximately $1.4 million at year end. On our Series A preferred stock, 169,460 shares remain outstanding, carrying a 12% cumulative annual dividend payable quarterly. The board declared and the company paid the regular quarterly preferred dividend during the quarter, consistent with our record of paying every Series A preferred dividend on time since 2020. With that, I'd like to hand the call back to Dom to discuss our go-forward strategic priorities at more length.