Executive Summary / Key Takeaways

• Strategic Transformation Underway: Onfolio Holdings is executing a strategic pivot from a diverse portfolio of online assets to a focused, B2B-centric digital services model, driven by accretive acquisitions and a strong emphasis on AI integration. This shift aims to capitalize on high-growth sectors and establish a more resilient, recurring revenue base.
• Accelerating Topline Growth: The company demonstrated significant revenue acceleration, with Q2 2025 revenue surging 82% year-over-year to $3.15 million and H1 2025 revenue increasing 80% to $5.96 million, primarily fueled by recent B2B acquisitions like Eastern Standard and DDS Rank.
• Emerging Technological Differentiators: Onfolio is actively investing in and launching new ventures like Pace Generative (a Generative Engine Optimization agency) and Eastern Standard's Precision Metrics custom dashboards, leveraging AI to enhance digital discovery, content production, and client analytics, creating a competitive edge in the evolving digital landscape.
• Path to Profitability Amidst Liquidity Concerns: While the company achieved its first-ever positive quarterly net income in Q4 2024 and a "fully profitable month" in April 2025, recurring operating losses and negative cash flows raise substantial doubt about its going concern status. Management is committed to achieving consistent profitability in the second half of 2025 through operational improvements and further capital raising.
• Competitive Niche with Growth Potential: Onfolio carves a niche through its specialized acquisition and management expertise, offering tailored solutions that differentiate it from larger, more generalized platforms. Its ability to integrate new technologies like AI will be crucial for sustained growth and margin improvement against well-capitalized rivals.

The Digital Acquirer's Ambition: A Strategic Pivot in the Online Economy

Onfolio Holdings Inc. (NASDAQ:ONFO) operates with a distinct strategy in the vast and dynamic digital economy: acquiring and actively managing online businesses. The company targets assets within sectors offering long-term growth, stable cash flows, minimal obsolescence risk, and strong management. This approach aims to provide investors with diversified portfolio risk by aggregating a collection of high-potential digital properties. Onfolio segments its operations into Business to Business (B2B) and Business to Consumer (B2C), a distinction that has become increasingly central to its strategic direction.

The digital marketing and online information industry is characterized by rapid technological evolution, particularly with the advent of advanced AI. This environment presents both immense opportunities for efficiency and new service offerings, as well as competitive pressures from established giants and agile startups. Onfolio's overarching strategy is to leverage its acquisition model to build a portfolio of businesses that can adapt to these changes, with a recent, pronounced pivot towards the B2B segment, which offers more resilient, recurring revenue streams compared to the often more volatile consumer-facing e-commerce.

A History Forged in Digital Assets: From Joint Ventures to Strategic Acquisitions

Onfolio's journey began with its incorporation in July 2020, building upon operations that commenced in May 2019. Early growth was characterized by investments in several joint ventures, such as OnFolio JV I, II, III, and IV, often initiated through its CEO, Dominic Wells. This foundational period established Onfolio's model of identifying and nurturing online assets. However, this early expansion was not without its challenges, including impairment charges on some joint venture investments in 2022 and the identification of material weaknesses in internal controls over financial reporting, which necessitated revisions to prior financial statements. These early experiences underscored the complexities of managing a diverse digital portfolio and the need for robust operational oversight.

The year 2024 marked a significant inflection point, described by CEO Dominic Wells as a "foundational year." Onfolio embarked on a strategic realignment, divesting underperforming assets like WPFolio LLC for $780,000 in cash, while simultaneously executing several pivotal acquisitions. These included RevenueZen, a provider of SEO services, DDS Rank, and most notably, Eastern Standard, a digital marketing agency specializing in branding and SEO. These acquisitions were instrumental in driving a strategic pivot towards B2B service-based businesses, which management believes offer higher growth and more stable revenue profiles. This strategic shift culminated in a breakthrough moment for the company, achieving its first-ever positive quarterly net income as a public company in Q4 2024.

Technological Edge: Fueling Growth in the AI Era

Onfolio is actively developing and integrating advanced technologies to enhance its service offerings and competitive standing, particularly within its B2B segment. A key differentiator is the recent launch of Pace Generative LLC in May 2025. This dedicated Generative Engine Optimization (GEO) agency is designed to help brands appear prominently in AI-generated search results. This initiative directly addresses a rapidly emerging opportunity in digital discovery and trust-building, positioning Onfolio at the forefront of a new frontier in digital marketing. The strategic intent behind Pace Generative is to capture meaningful revenue and profit by enabling clients to adapt to the evolving search landscape dominated by AI.

Furthermore, Onfolio's subsidiary, Eastern Standard, launched Precision Metrics Custom Dashboards in September 2025. These dashboards are designed to help organizations decode complex website analytics data and drive actionable results. This technology provides clients with enhanced visibility and insights into their digital performance, fostering stronger client relationships and demonstrating Onfolio's commitment to data-driven solutions. While specific quantifiable performance metrics for these new technologies are not yet publicly detailed, their strategic importance lies in their ability to enhance client value, improve operational efficiencies, and expand Onfolio's service capabilities in high-demand areas. The company's broader AI integration strategy, including automated content production and marketing efficiencies, aims to accelerate margin improvement across its portfolio. These technological advancements are crucial for Onfolio to build a sustainable competitive moat, improve financial performance through higher-value services, and solidify its market positioning as an innovative digital marketing partner.

Financial Performance: A Growth Story with Profitability on the Horizon

Onfolio's strategic pivot and acquisition spree have translated into significant topline expansion. For the three months ended June 30, 2025, total revenue surged 82% year-over-year to $3.15 million, up from $1.73 million in Q2 2024. The six months ended June 30, 2025, saw an 80% increase in revenue to $5.96 million, compared to $3.31 million in the prior year period. This growth was primarily driven by the Eastern Standard acquisition (Q4 2024) and the DDS Rank acquisition (Q2 2024), which significantly bolstered the B2B segment. Notably, April 2025 marked the first fully profitable month in the company's history, and Q2 2025 was the first quarter where every month surpassed $1 million in revenue.

The B2B segment has been the primary engine of this growth, with revenue increasing by 116% to $1.97 million in Q2 2025 and a remarkable 130% to $3.67 million in H1 2025. This substantial increase reflects the successful integration and performance of the newly acquired B2B service providers. The B2C segment also contributed positively, with revenue growing 45% to $1.17 million in Q2 2025 and 33% to $2.29 million in H1 2025, largely due to increased digital product sales from the Proofread Anywhere subsidiary.

Despite the robust revenue growth, Onfolio reported a net loss of $534,439 for Q2 2025 and $1.34 million for H1 2025. The Q2 2025 loss from operations of $507,000 included significant non-recurring items: $301,000 in acquisition amortization, $25,000 in stock-based compensation, and approximately $150,000 in one-time expenses related to the 2023 re-audit and the Eastern Standard acquisition audit. Excluding these, the quarterly net loss would have been substantially lower, indicating an improving underlying operational trend. However, the company's gross profit margin slightly decreased, and selling, general, and administrative expenses increased by 53% in Q2 2025, driven by higher advertising, marketing, contractor, and amortization costs associated with the expanded portfolio.

When comparing Onfolio's financial health to its publicly traded competitors, a nuanced picture emerges. Onfolio's latest TTM Gross Profit Margin of 59.09% is competitive, sitting below Wix (WIX) (68%) and HubSpot (HUBS) (85%), but above GoDaddy (GDDY) (64%) and Thryv (THRY) (65%). However, Onfolio's TTM Operating Profit Margin of -23.15% and Net Profit Margin of -16.36% highlight its current unprofitability, contrasting sharply with the positive operating margins of GoDaddy (20%) and Wix (6%), and even Thryv (-4%) and HubSpot (-3%) which, while sometimes negative, operate at a much larger scale. Onfolio's Current Ratio of 0.50 also indicates tighter liquidity compared to competitors like Thryv (1.07), GoDaddy (0.72), Wix (0.84), and HubSpot (1.67), underscoring the ongoing need for capital. These figures emphasize that while Onfolio is achieving significant revenue growth, it is still in an investment phase, prioritizing expansion and strategic realignment over immediate, consistent profitability.

Liquidity and the Path Forward: Addressing the Going Concern

Onfolio's recurring operating losses and negative cash flows from operations continue to raise substantial doubt about its ability to continue as a going concern. For the six months ended June 30, 2025, net cash used in operating activities was $575,164. Management acknowledges that current cash and future operating cash flows may not provide adequate resources for the next twelve months. This situation is a critical risk factor for investors.

To address these liquidity challenges, Onfolio has been active in financing activities. In the first half of 2025, the company generated $585,097 in cash from financing, including $865,965 from the sale of Series A preferred stock. This capital was partially offset by preferred dividends, payments on notes payable, and contingent consideration. The company also launched a Regulation D offering for Series A Preferred Shares in February 2025 to fund continued growth and support acquisitions. While management has no formal plan in place, it anticipates securing additional funds through equity or debt financing and/or related party advances. However, there is no assurance that such funding will be available on favorable terms, or at all, and any equity financing would likely be dilutive to common stockholders.

Further complicating the financial picture are identified material weaknesses in internal controls over financial reporting as of June 30, 2025. These include ineffective controls over manual journal entries, accounting for website design and implementation revenues, and impairment testing for goodwill and intangible assets. These deficiencies led to revisions of prior financial statements. Management is actively working to remediate these weaknesses in 2025 by adding accounting personnel and implementing stronger procedures, though successful remediation is not guaranteed.

Competitive Arena: Carving a Niche Against Digital Giants

Onfolio operates in a highly competitive digital landscape, vying for market share against a diverse set of players ranging from broad platform providers to specialized software solutions. Its unique competitive positioning lies in its diversified portfolio acquisition strategy and specialized management expertise. Unlike companies like GoDaddy or Wix.com which offer self-service website building and hosting tools, Onfolio focuses on acquiring controlling interests in established online businesses and actively managing them for long-term value creation. This hands-on approach allows for tailored operational optimization and deeper integration of services, potentially leading to stronger performance in niche markets.

Against Thryv Holdings, which provides integrated digital marketing and business software for SMEs, Onfolio's model offers greater flexibility for acquired businesses to operate independently, potentially fostering stronger operational efficiency within specific verticals. While Thryv benefits from a larger scale and robust recurring subscription revenues, Onfolio's specialized management can drive higher efficiency in revenue generation from individual assets. Similarly, compared to HubSpot, an all-in-one marketing, sales, and service software provider, Onfolio's diversification strategy allows it to exploit opportunities in asset management that HubSpot's integrated software model does not address.

Onfolio's competitive advantages include its ability to identify and acquire profitable online assets, leveraging its expertise to optimize their performance. Its recent technological initiatives, such as Pace Generative, further differentiate it by addressing emerging needs in AI-driven search, a segment where larger, more generalized platforms may be slower to adapt. This specialized focus can lead to superior customer loyalty within its managed portfolio and enhanced pricing power in its niche.

However, Onfolio faces significant competitive disadvantages due to its smaller scale. This can result in higher operational costs and slower scaling compared to well-capitalized rivals. Its revenue streams, while growing, are still dependent on the performance of acquired businesses, exposing it to concentration risks. The broader industry trend towards AI and data center growth, while creating opportunities, also demands substantial investment in digital infrastructure. Larger competitors like GoDaddy, with their extensive resources and established market presence, are better positioned to absorb these costs and capitalize on new revenue opportunities from these trends. Onfolio must continue to demonstrate agility and effective capital deployment to overcome these scale-related challenges.

Outlook: Strategic Execution Towards Sustained Profitability

Onfolio's management remains steadfast in its commitment to disciplined execution of its strategy, further improving financial performance, and completing accretive acquisitions to drive long-term shareholder value. The company's current growth trajectory, particularly the strong performance of its B2B segment and the achievement of a fully profitable month in April 2025, positions it closer to achieving consistent monthly profitability.

Management has reiterated its confidence in reaching profitability in the second half of 2025, contingent on the successful execution of organic growth initiatives and targeted acquisitions. This outlook is supported by ongoing cost reduction efforts across the portfolio and parent company, alongside the strategic pivot towards higher-margin service revenues. The expanding AI integration strategy, including automated content production and marketing efficiencies, is expected to accelerate margin improvement. Onfolio anticipates that general and administrative expenses will increase in the near term to support business growth but are projected to decrease as a percentage of revenue over the long term, indicating an expectation of improved operating leverage. Acquisition costs are expected to remain significant as the company continues to pursue its growth-by-acquisition model.

Conclusion

Onfolio Holdings is in a critical phase of its evolution, transforming into a more focused, B2B-centric digital services company. The company's strategic pivot, fueled by targeted acquisitions and a proactive embrace of AI-driven technologies like Pace Generative and Precision Metrics, has ignited impressive topline growth. This narrative of strategic realignment and technological differentiation forms the core investment thesis, suggesting a company actively adapting to and capitalizing on the evolving digital landscape.

However, the path to sustained profitability is not without significant hurdles, most notably the ongoing liquidity concerns and the expressed doubt about its ability to continue as a going concern. While management's commitment to operational improvements and capital raising is clear, investors must closely monitor the successful remediation of internal control weaknesses and the company's ability to secure necessary financing. Onfolio's ability to leverage its specialized management expertise and technological innovations to carve out a defensible niche against larger, more established competitors will ultimately determine its long-term success and its capacity to translate its impressive revenue growth into consistent, sustainable profitability.