TL;DR
- Our near-term priority is reaching sustainable profitability at the parent-company level. For purposes of this discussion, we define “profitability” as portfolio cash distributions consistently exceeding parent-company cash expenses.
- We are closing the gap by controlling parent-company costs, improving cash flow from the existing portfolio, and selectively pursuing cash-generative acquisitions.
- Portfolio growth is being driven by targeted improvements in lead generation and sales execution.
- Recent financing strengthened the balance sheet and extended runway; to date, approximately $6 million has been raised, with any additional capital subject to market conditions and facility terms.
- We will track and report a small set of operating metrics to measure progress over the coming quarters.
We recently announced that we obtained additional financings that materially strengthen the company’s position.
This article outlines how we plan to leverage that capital and continue towards profitability.
We also realize that understanding and tracking our progress can be difficult. As a small acquisitive serial acquirer, we do not consider GAAP Net Income to be the best metric for our company to measure our financial success, and it has occurred to us that over the years, a lot of investors have struggled to fully understand how to interpret our financial statements from this perspective. All of our GAAP compliant financial statements can be found on our company’s website HERE.
The purpose of this article is to provide our shareholders with a perspective that we believe will assist them to better understand our short -term and long -term financial prospects.
We continue to believe that our initial investment thesis is attractive and that we can build a platform to grow our intrinsic value per share, but in the near term we have to focus more on actually being able to fund that platform.
What Matters Right Now
Sustained profitability is the prerequisite for executing the remainder of our strategy.
We are an owner-operator that grows primarily by acquiring and running businesses.
That approach only works when the parent company can fund itself first.
Our portfolio generates profit, but scaling responsibly requires that it fully fund parent company expenses.
So far, we’ve used acquisitions to narrow the gap between our corporate overheads and the cashflow our portfolio generates. As of September 30, 2025, our revenue has grown 10x since our IPO in 2022, and cash from the portfolio has grown too.
We view our recent financings as key to helping us close the gap and reach that profitability.
Where We Sit Right Now
Throughout 2023, 2024 and 2025, our goal was always to reduce cash burn.
This happens via a combination of growing the cash distributed by the portfolio, and reducing parent company expenses.
Right now, our portfolio companies operate in two segments. The agency businesses (ES, CE, SEOB, RZ, DDS) and the DTC business (VR and PA).
We are actively consolidating the agencies into a more unified agency platform. This allows cost savings, improved focus, and more intentional growth initiatives with the support of the central team.
We’ll go into more detail in a future earnings call, but some of the money we just raised is being used to build a more deliberate sales and marketing team that should be able to make a meaningful impact across the agency portfolio.
Previously we encouraged individual subsidiaries to handle their own growth, but we have now determined that doing it at a central level will likely produce better results. With improved capital capacity, we can now execute this growth more centrally.
In our DTC segment, we’re also finding opportunities to consolidate media buying, ad creative creation, and email marketing, while reducing costs. These are the real levers for those two businesses, and we’re being intentional about the balance between cutting costs and spending on growth.
As for the parent company, it has various fixed and recurring expenses:
- Public Company Costs (Nasdaq fees, compliance, insurance, SEC filings, audits)
- C-suite Salaries
- Accounting and other Professional Fees
And less recurring but sometimes significant expenses:
- Acquisition related professional fees (Audits, legal fees, closing costs).
There are other non-cash items that show up in our financials, such as amortization, impairments, stock-based comp. For the purpose of this article we are ignoring these, as our near-term focus is cash burn reduction rather than GAAP Net Income.
Operating Leverage
An important question we get from investors is how the parent company expenses scale as we acquire more companies.
We do believe we have operating leverage and each future acquisition will not see our expenses increasing materially, outside of one-time acquisition costs (legal fees and audit fees).
A good example of this operating leverage is how our parent company expenses and cash burn have stayed flat over the years, while our revenue and gross profit has climbed over time.
The charts below focus on three questions: what the parent company needs to fund itself, how close the portfolio is to funding those needs, and whether the underlying operating businesses are becoming more profitable.
What this graph shows is the parent company cash expenses, plus preferred share dividends and interest expenses (combined). We can see that over time, the parent company cash use has decreased, though the total expenses are mostly flat. This is due to an increase in interest payments from funding acquisitions.
We expect this number to continue to trend down or stay flat over time.
What this means is that as we acquire more companies that increase the portfolio profitability, the parent company costs do not significantly increase alongside them.
This second graph shows two things:
- How much cash was distributed from the portfolio up to the parent
- How much cash was retained at the portfolio level instead of sent up to the parent company.
During 2023, the portfolio companies focused on operations and didn’t send cash up to the parent, but in 2024 we focused on distributing excess cash to the parent, which you can see reflected in the blue bars.
Over time, the cash distributed from the portfolio to the parent company has increased, as we have grown and optimized the portfolio.
The key metric to watch for is when distributed cash surpasses portfolio expenses, but we have included the retained cash element for extra context.
This chart shows the total parent cash burn (solid gray line) inclusive of interest payments, vs the cash distributed to the parent (green bar) and overall cash at the subsidiary level (light green bar).
The key thing to watch for is when the green bar passes the solid gray line, which means the parent received more cash from the portfolio, than it spent itself. The green total bar is useful for times when the portfolio generated or retained liquidity but kept it at the subsidiary level.
What this chart demonstrates is that over time our portfolio has come closer and closer to being able to fund the parent company, and we aren’t far from crossing the threshold.
The final chart is to show the overall profitability of the portfolio. For purposes of this discussion, we define “portfolio operating profit” as portfolio net income, before non-cash amortization.
Note: We don’t own 100% of every business, but this chart shows the overall productivity of the portfolio.
How We’re Thinking About 2026
For 2026, it is quite a straight forward task to identify what our recurring expenses will likely be.
In 2025 we incurred costs relating to our need to re-audit our 2023 financials, plus we had to audit 2022-2024 financials for Eastern Standard. Those were significant non-recurring additional cash expense, in excess of $200,000.
Also during 2025, we cleared over $1M liabilities from our balance sheet which will result in approximately $150k/year in savings on debt interest payments.
As mentioned above, at the portfolio level, we’re further consolidating teams and reducing expenses, which has been something we’ve been focusing on for the past 24 months, and that we continue to make progress with. The more we operate our portfolio, the better we get at this process.
Austerity is not the only lever we have, and cutting too much can become counterproductive if it leads to a decline in revenue.
The next lever we are pulling is already in motion.
We’ve hired two marketing specialists to our company who are tasked with generating more leads for the consolidated agencies, and more sales.
This is a core focus as the impact could be large. These roles target specific bottlenecks rather than broad-based headcount expansion.
We anticipate that a 10% increase in sales in the agency portfolio should get us close to bridging the gap to cashflow profitability. A 20% increase gets us even closer, a 30% increase sees us comfortably over the line, assuming other operational projections stay in line with expectations.
Over the next one to two quarters, our focus will not be on aggressive expansion but on demonstrating measurable improvement in portfolio cash flow and reduced parent company-level burn. We expect leading indicators of progress to be visible before full financial impact is reflected in reported results.
What We Will Be Tracking (and Reporting)
To keep this process transparent, there are a small number of metrics we believe matter most over the next several quarters:
- Cash distributed from the portfolio to the parent company
- Parent company cash burn
- Agency portfolio revenue and gross margin
When portfolio cash consistently exceeds parent company expenses, the business becomes self-funding. That is the threshold we are working toward.
Where Acquisitions Fit In
For this crucial phase, 1 or 2 properly sized acquisitions can help close the gap even more.
The ideal acquisition would be a business that:
- Delivers consistent cashflow that can immediately be distributed to the parent company. Not every acquisition does this in the first few months, as integration can lead to inconsistency early on.
- Does not distract from our core job of growing the existing portfolio.
- Can be financed without leading to significantly more debt or interest payments. This means financing with preferred shares or large seller notes may not be a viable path until we have hit our profit goals.
The facility we just raised may prove useful here, but it does rely on a number of conditions we may not meet at this time, so we will look for other ways to fund acquisitions beyond this.
It’s worth pointing out that acquisitions are an accelerant, not a requirement, for reaching profitability.
Where The Digital Asset Treasury And Our Recent Financing Fits In
To support this path to profitability, we recently completed the abovementioned financing.
This materially strengthened our balance sheet and reduced near-term execution risk. The structure we chose provided additional net cash, improved liquidity, and introduced digital assets that generate yield while preserving strategic flexibility.
The financing saw us raise an initial $6m, of which $4.5M was put into digital assets (Bitcoin, Ethereum, and Solana) and the rest was used for working capital, growth, debt repayment, and professional fees.
While the inclusion of digital assets contributed incremental upside, the primary purpose of the raise was to extend runway, improve capital efficiency, and give the operating businesses time to do what they are designed to do: produce sustainable cash flow.
How The Financing Works
To date, we have raised approximately $6 million from our recently announced financing facility, which provides capacity of up to $300m over time.
While the facility provides a path to access additional capital over time, our ability to obtain any capital from our financing facility and is governed by the terms of the agreement and is dependent upon market conditions such as share price and trading volume and other conditions.
We recently filed an S-1 that registers shares that may be issued in connection with the facility; it does not mean those shares have already been issued, nor that the maximum amount will ever be utilized.
Summary Of Our Plan
To summarize, our plan is simple:
Continue to bridge the gap between parent company expenses and portfolio cash distributed to parent.
Do this by:
- Controlling parent company costs
- Growing portfolio cashflow
- Acquiring additional profitable companies
The plan itself is straightforward.
What has changed is our position: expenses are lower, liabilities are reduced, the balance sheet is stronger, and execution is more centralized. As a result, the remaining work is operational, not theoretical.
If you want to go deeper, I put together two free guides: How to Evaluate a Micro-Cap Holding Company covers the 7 criteria most investors miss, and The Math of Serial Acquisition breaks down why buying at 3x multiples compounds differently than buying at 15x.
I also wrote about why small public companies like ours represent a structural opportunity that most of Wall Street literally cannot access: The Asset Class Wall Street Ignores.
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