End March 31st, 2026. By now everyone should have access to the second quarter of fiscal 2026 earnings press release, which was issued today at approximately 4:05 P.M. Eastern Time. The release will be available on the investor relations section of Forward Industries website. This call will also be available for webcast replay on the company's website. Following management's remarks, we'll open up the call for Q&A. I'll now hand the call over to Forward Industries General Counsel, Georgia Quinn, for introductory comments. Georgia, please go ahead.
Thank you, operator. Before we begin, I'd like to remind everyone that today's call may include forward-looking statements within the meaning of the federal securities laws. All forward-looking statements made by the board or management on this call are based on their assumptions and beliefs as of today. You should not rely on forward-looking statements as predictions of future events, as these statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For more information about these risks, uncertainties, and other factors can be found in Forward Industries filings with the Securities and Exchange Commission. During today's discussion, we will reference certain metrics related to our Solana digital asset treasury, including SOL holdings, SOL per share, staking performance, validator operations, and deployments. These metrics are core to evaluating the execution and progress of our strategy.
With that, I will turn the call over to Forward Industries Chairman of the Board, Kyle Samani. Kyle, please go ahead.
Thank you, Georgia, good afternoon, everyone. Our second fiscal quarter was defined by disciplined execution. Against the backdrop of continued market volatility, we took decisive steps to strengthen Forward's capital foundation, improve our cost structure, and deepen our engagement across the Solana ecosystem. In March, we completed a strategic share repurchase that reduced our common shares outstanding by 7.4%, accessing $40 million of institutional debt from Galaxy Digital on highly advantageous terms and implemented a cost reduction initiative that has yielded material operating expense savings through disciplined cost management. Together, these actions reflect the long-term mindset that we bring to managing Forward. Disciplined capital allocation, compounding SOL per share, which is currently above 44% on an annualized basis on an annualized in-the-money basis, and positioning the business to grow and diversify alongside the Solana ecosystem.
These two themes are continued conviction in the Solana ecosystem, particularly its accelerating momentum across stablecoins, payments, and real-world assets, and the opportunities we see to deepen Forward's engagement with the Solana ecosystem to grow and diversify our revenue are where I want to focus our time today. Starting with the network. Solana's transition from promising technology to real financial infrastructure has accelerated meaningfully in recent months. For stablecoins and payments, Solana is emerging as the default settlement layer for dollar-denominated value on-chain. According to Messari report published in early March, total payment volume on Solana grew more than 8x year-over-year, which is nearly 3 times the median growth rate of comparable fintech and blockchain platforms.
The Solana Foundation's launch of payments.org in late February, and the Solana developer platform in March, which brings together Mastercard, Worldpay, Western Union, and other global payments partners, has consolidated what had been a fragmented set of partnerships into a single institutional-grade payment stack. Western Union is expected to go live with its U.S. dollar payment token, USDPT, on Solana in the first half of this year, connecting on-chain dollar transfers to Western Union's network of more than 360,000 physical cash locations worldwide. On real-world assets, in January, Ondo Finance launched over 200 tokenized U.S. stocks and ETFs on Solana, joining an ecosystem where tokenized equities had already processed over $3 billion in transaction volume.
Forward was among the first pilot companies to put its SEC-registered shares on-chain through Superstate, and we view the rapid expansion of tokenized equities on Solana as further validation of the thesis that Solana is becoming the settlement layer for capital markets. In March, the SEC approved Nasdaq's proposal to trade tokenized securities alongside their traditional counterparts on the same order book, covering Russell 1000 stocks and major ETFs. As a Nasdaq-listed company that already has its shares tokenized on Solana, we view this as a powerful convergence. The infrastructure that Forward helped pioneer is now being adopted by the exchanges themselves. On the infrastructure side, the rollout of Firedancer, Jump Crypto's independent validator client for Solana, represents a landmark moment for the network's decentralization and resilience.
Firedancer's testnet results showed throughput exceeding 1 million transactions per second. The client is now phased, and now phase mainnet deployment. This is exactly the kind of foundational infrastructure maturation that institutional participants need to see before committing capital at scale. At the network level, Solana continues to lead across the metrics that matter: decentralized exchange volume, real economic value generated, active users, and developer engagement. These fundamentals reinforce our view that it is not just another blockchain. It is the execution layer for what we've often called the internet capital markets. Before we move on to Forward's strategic initiatives, I want to address a topic that's gotten a lot of attention lately: the security incident involving Drift Protocol on Solana and more broadly, the other exploits we've seen as a crypto industry across a number of other networks.
The key point here is that the incident involving Drift was a social engineering attack, not an explicit exploit of the Solana protocol or contract code itself. Bad actors targeted with privileged access through deception, not through any underlying vulnerability in the network. To be clear, Solana's core layer one network has not experienced a consensus-level breach. The base protocol has continued to operate with full uptime, strong validator decentralization, and no cryptographic vulnerabilities. Think of it this way, a breach at a company running on AWS does not mean AWS is broken. The same logic applies here. If anything, these incidents reinforce how seriously we take operational security in managing our own holdings. As the Solana ecosystem continues to accelerate, so do the opportunities for Forward to leverage protocols in the network to drive revenue growth.
As such, priorities for 2026 are focused on two initiatives. First, deepening our engagement with the Solana ecosystem in ways that grow and diversify revenue. Second, using our strength and balance sheet to lower cost structure and accelerate SOL per share growth. On the ecosystem engagement front, we've made meaningful progress on initiatives we've discussed previously. First, tokenized FWDI. Forward remains one of the only public companies with SEC-registered shares that live on a public blockchain through Superstate's Opening Bell platform. There are currently more than 6.9 million shares of FWDI tokenized on Solana, and the Kamino pool where FWDI can be utilized as collateral for on-chain loans is approximately at 91% utilization. Next initiative I'd like to talk about is our Forward Validator and fwdSOL.
Today, over 6.9 million SOL is staked to Forward Industries validator, and it is the 8th-largest validator in the Solana network by stake weight. Our proprietary liquid staking token, fwdSOL, has become a cornerstone of our capital market strategy. It is collateral supporting our $40 million institutional debt facility with Galaxy Digital, which Ryan Navi will discuss more in detail. On the revenue front, I wanna highlight Forward Industries minority investment in deployment of capital in OnRe, a Solana-native reinsurance protocol that is building infrastructure to bring the traditional risk transfer markets on-chain. Since launch, OnRe has attracted meaningful liquidity, onboarded its first reinsurance counterparties, and built a real reputation as one of the more interesting DeFi-native risk protocols on Solana.
What's compelling here is that Forward participates in OnRe both as an investor and as a participant in the OnRe protocol by purchasing ONyc tokens. We have direct upside as the protocol grows and generates fee revenue. That also adds USD-denominated, non-correlated revenue for Forward, which helps diversify our revenue base beyond SOL. Each of these initiatives is designed to accomplish the same thing, turn Forward from a passive treasury holder into an active participant in the Solana economy, generating yield above the native staking rate, expanding our surface area on-chain, and creating durable sources of revenue beyond staking alone. With that, I'd like to turn the call over to Ryan Navi, Forward's Chief Investment Officer, to further discuss our strategic initiatives and treasury performance during the quarter. Ryan?
Thank you, Kyle, and good afternoon, everyone. Since stepping into the CIO role in December, I focused on building out a comprehensive plan to drive meaningful SOL per share growth, lower our cost of capital, and position Forward as the Berkshire Hathaway of Solana in the long term. Today, I'd like to walk through our progress on all three, starting with treasury performance, moving through our capital structure actions during the quarter, and closing with how we're positioning Forward for the future. As of March 31st, 2026, Forward held a little over 7 million Solana, with nearly all of our holdings generating native staking yields between 6.5% and 7.2%. Cumulative staking rewards since our inception in September 2025 have now exceeded 200,000 Solana.
25.1% of our Solana is now represented as fwdSOL, our proprietary liquid staking token developed with Sanctum. fwdSOL is what allows us to continue earning native staking yield while simultaneously using our holdings productively as collateral, and it is the foundation of the institutional debt facility I'll discuss in more detail later. Turning to SOL per share, we've continued to compound our fully diluted SOL per share from 0.0604 in September 2025 to 0.0624 as of December 31st, 2025, and to 0.0669 as of March 31st, 2026. That reflects annualized SOL per share growth of 29.1% on a fully diluted basis since the launch of our treasury strategy. On an in the money share basis, our annualized SOL per share growth exceeds 44%.
Our fully diluted share count as of March 31, 2026, was 105,231,015 shares, comprised of 76,314,617 common shares net of treasury, 25,759,600 warrants, 1,599,066 options, and 1,557,732 unvested, restricted, and performance stock units. The reduction in common shares outstanding from 84.9 million- 76.3 million reflects our March repurchase of 6.2 million shares in our ongoing share repurchase program, which reduced our basic shares outstanding by 10.1%. As of March 31, 2026, Forward's NAV was $0.827.
Calculated using the closing price of Solana on March 31st of $83.12, total SOL holdings of 7,044,079, plus our cash balance less debt Forward's closing price of $4.43, and a fully diluted share count of 105,231,015 shares. The most consequential actions during the quarter were in our capital structure. In March, we completed two highly strategic transactions that, taken together, represent the disciplined capital allocation we believe is required to deliver long-term value to our shareholders. This, in turn, gave us the balance sheet strength to capitalize on opportunities like our investment and deployment into OnRe, which provides Forward with upside as the tokenized RWA ecosystem on Solana grows and adds a USD-denominated revenue stream for the company.
First, we entered into a master digital currency loan agreement with our long-standing partner, Galaxy Digital, and drew on an initial $40 million facility collateralized by fwdSOL with a weighted average interest rate of 3.4% and a weighted average maturity of five months. I really wanna underscore how compelling these terms are. At a 3.4% weighted average interest rate, this facility represents access to capital at a cost that is, in our view, not only highly advantageous relative to what is available to most companies in our sector, but also most publicly traded small to medium-sized market cap companies. Our extremely attractive cost of capital is the direct product of the strength of both our balance sheet and our team's approach to risk management.
Given the recent drawdown in Solana, in conjunction with our shares trading at a discount to NAV, we made the conscious decision to lower our cost of capital via non-dilutive financing, meaning that we're able to access liquidity without issuing equity or selling our SOL holdings. It's also important to note that approximately 40% of this facility is evergreen in nature, which means it automatically renews and does not require active refinancing. This provides us with a stable, recurring capital base and means the effective refinancing burden on the remaining portfolio is both manageable and well within our liquidity planning horizon. Second, on March 19th, we announced a deployment of $27.4 million of that $40 million credit facility to repurchase 6.2 million shares of our common stock at $4.44 per share.
This transaction reduced our basic shares outstanding by 7.4% and our fully diluted shares outstanding by 5.5%, which drove an immediately compelling SOL per share accretion of 8.0% on a common share basis and 5.8% on a fully diluted basis. Third, on May 5th, we announced our investment and deployment into OnRe. Alongside RockawayX, the global multi-strat digital asset investment firm, Forward co-led OnRe's $5 million Series A at a $25 million post-money valuation and has begun deploying capital into ONyc, OnRe's yield-bearing token on Solana. ONyc provides Forward with real-world cash flows that are both complementary and uncorrelated to Solana. By gaining exposure to reinsurance through a tokenized on-chain structure, we're unlocking a new layer of durable dollar-denominated income while remaining fully aligned with the Solana ecosystem.
Together, this series of transactions gives us three things: dramatic SOL per share growth, a robust balance sheet to continue operating and investing in the business, and most importantly, an enhanced capital structure that lowers our cost of capital, which unlocks a wider opportunity set to pursue strategic transactions, beginning with OnRe, that will deliver greater SOL per share growth and value to shareholders over the course of 2026. Looking ahead, we will continue to focus on driving efficiencies across the business while executing on three strategic priorities. First, continuing to leverage our advantageous access to capital through the Galaxy facility and new potential relationships to further optimize our capital structure and lower our cost of capital, which will further accelerate our ability to compound SOL per share.
Second, identifying and executing on select opportunities that accelerate our SOL per share growth above the baseline native Solana staking rate, while also pushing the Solana ecosystem forward as a whole. This includes evaluating M&A, strategic investments, structured transactions, and scaling our on-chain operating initiatives. OnRe is a good example of this. It's a Solana-native reinsurance protocol that's growing quickly and already showing real traction. Forward is in as both an investor and a liquidity provider, we have direct upside as OnRe scales, and we're generating USD-denominated revenue in the process. Third, positioning Forward to not only provide sustainable best-in-class SOL per share growth, but also to continue to grow the absolute scale of our treasury.
We believe the foundation we've built, coupled with our leading scale, robust balance sheet, improved cost structure, and deep partnerships with Galaxy, Jump, and others, will enable us to execute on our 2026 growth and profitability objectives on our way to building the Berkshire Hathaway of Solana. I'll now welcome and pass the call over to our newly appointed Chief Financial Officer, Mark Brazier, to walk you through our GAAP financial results and the cost reduction plan. Mark?
Thank you, Ryan, and good afternoon, everyone. I'm very pleased to address you all for the first time as Forward's new Chief Financial Officer. As many of you may be aware, I joined Forward approximately a month ago on April 13th, succeeding Kathy Weisberg, who continues to serve the company as Director of Financial Reporting. I would like to take a moment to thank Kathy for her leadership during a truly transformational period for Forward, and for the strong expertise and partnership she continues to offer. By way of introduction, I bring with me more than 25 years of experience across both digital assets and traditional finance. Most recently as Chief Financial Officer and Head of Regulatory at XBTO Global, and previously as Chief Financial Officer at Stablehouse.
I'm excited to join the team at such a pivotal moment in the company's history, and in particular to help execute against the cost discipline and capital structure priorities Ryan just outlined. I'd like to turn to our financial results for the second quarter of fiscal year 2026. As a reminder, all comparisons and variance commentary refers to the second quarter of fiscal year 2025, unless otherwise specified. Revenue in the second quarter of fiscal year 2026 increased more than 4x to $13.0 million, compared to $3.1 million in the prior year period. Gross margin expanded materially to 70.0% in the second quarter of fiscal year 2026, compared to - 5.7% in the second quarter of fiscal year 2025.
These increases were primarily driven by staking revenue generated through Forward's Solana treasury strategy. Selling general administrative expenses during the second quarter of fiscal year 2026 was $6.6 million, compared to $7.2 million in the first quarter of fiscal year 2026. An early but meaningful indication that the cost reduction plan we announced in March is beginning to take effect. Year-over-year increase of $5.0 million was primarily driven by higher operational costs associated with Forward's transition to its Solana treasury strategy. As of March 31st, 2026, our cash position was $16.6 million, compared to $25.4 million as of December 31st, 2025. The sequential decrease primarily reflects the use of $47.1 million to repurchase 9,214,655 shares during the quarter.
Institutional debt outstanding as of March 31st, 2026 was $40.0 million at a weighted average interest rate of 3.4% and a weighted average maturity of five months. With regards to the cost reduction plan, we are continuing to implement measures to reduce our SG&A spend. Our targeted quarterly SG&A run rate, excluding stock-based compensation, is approximately $4.8 million, down from $7.2 million in Q1 and $5.8 million in Q2. The primary drivers of that reduction are renegotiated fees under our services agreements with Galaxy Digital, lower outside legal and marketing spend, reduced third-party vendor costs, and broader operational efficiencies, all part of the SG&A reduction initiative that we commenced at the end of 2025.
That said, our SG&A will still remain subject to certain variable costs, most notably the asset management fee we pay Galaxy, which is tied to a percentage of our AUM. We remain committed to evaluating our cost structure on an ongoing basis and identifying additional efficiencies throughout the year. I'd also like to reiterate the current GAAP accounting treatment for our SOL holdings. Current accounting standards for digital assets require changes in the fair value of SOL and fwdSOL to be recorded as components of operating income or loss. These fluctuations do not impact our cash balance, yield generation, or our ability to continue compounding SOL per share. This accounting distinction is essential in evaluating our financial performance, which is driven by strategy execution, not short-term market volatility.
As a result of this treatment, in the second quarter of fiscal year 2026, Forward recognized a loss on digital assets of approximately $201.7 million and an impairment charge of approximately $85.1 million related to our Forward SOL holdings, leading to a net loss of $283.1 million, compared to a net loss of $585.7 million in the prior quarter and $1.5 million in the second quarter of fiscal year 2025. Again, this loss was primarily driven by the decline in the price of SOL and therefore the fair value of our SOL holdings. I will now pass the call back to our General Counsel, Georgia Quinn, to cover regulatory updates.
Thank you, and welcome, Mark. I'd like to briefly address several regulatory developments that occurred during the quarter because they are directly relevant to how investors should evaluate Forward and our strategy. The first calendar quarter of 2026 was one of the most consequential quarters for U.S. digital asset regulation ever. I'll touch on three developments in particular. First, on March 11, the SEC and CFTC executed a memorandum of understanding, establishing a formal framework for coordination on matters of shared regulatory concern. The MOU committed both agencies to streamline regulatory reporting, coordinated examinations, and harmonized oversight. It laid the procedural groundwork for the joint guidance that followed and creates the necessary foundation from which to begin joint rulemaking once the Clarity Act or its progeny legislation is passed.
Second, on March 17th, the SEC issued a commission-level interpretive release titled Application of the federal securities laws to Certain types of crypto assets. With the CFTC joining and confirming it will administer the Commodity Exchange Act consistent with the SEC's interpretation. The release establishes a five-category taxonomy for digital assets and clarifies the application of federal securities laws to airdrop, protocol mining, protocol staking, among other activities. We believe two elements of this guidance are particularly important for Forward and our shareholders. First, the interpretive release is consistent with our view that Solana, the digital asset at the core of our treasury, is a digital commodity rather than a security. It is also consistent with the view that protocol staking activities of the type conducted through our validator infrastructure are not, in and among themselves, securities transactions.
We want to be clear that this guidance is interpretive in nature and does not carry the weight of statutory law, but it represents a meaningful step toward the regulatory clarity that has long been needed in our industry. Third, the Digital Asset Market Clarity Act, which passed the House in July 2025, remains under consideration in the Senate. The Clarity Act would, if enacted, codify a comprehensive market structure framework allocating jurisdiction between the SEC and the CFTC for digital asset markets. While the legislative process is ongoing and we cannot predict the timing or final form of any legislation, we are encouraged by continued bipartisan engagement on this bill, the MOU previously noted, and we believe that the statutory clarity will further reinforce the foundation on which our strategy is built.
Although not during our reporting period, on April 13th, the SEC staff also issued guidance that pursuant to certain guidelines, the providers of user interfaces to crypto services, both centralized and decentralized, may receive transaction-related compensation without being subject to broker-dealer registration. This provides comfort to developers trying to bridge traditional finance and digital assets by creating user-friendly and educational experiences enabling users to access on-chain finance. I'll add one final note. None of what I've just described changes our underlying strategy, our compliance posture, or our disclosure obligations. While we are pleased to see the continued progress toward regulatory clarity and the motivation of lawmakers and regulators to engage with the industry, we have built Forward to operate a public company standard of governance and transparency regardless of the regulatory environment, and we will continue to do so. This concludes our prepared remarks.
Before I pass it back to the operator to open up the call for live Q&A, we'd first like to address a few of the questions that have come in via email over the past few weeks. Ryan, to start, can you please share more about the OnRe transaction? Specifically, how was the transaction financed? Can you explain the deployment into the ONyc token, and how much was deployed? Can you share any color on the yield Forward is earning relative to the cost of capital for the deployment?
Yeah, sure. The OnRe deal has two parts. First, Forward completed a minority investment into OnRe's $5 million Series A, which we co-led with RockawayX. Second, we deployed $16 million into OnRe's yield-bearing token, on Solana. For reference, OnRe provides us non-correlated U.S. dollar-denominated revenue tied to reinsurance. The cash for both investments was funded from $40 million in new evergreen loans with an interest rate of 2%. If OnRe yields, let's say, 12%, we pick up 10 points of net spread with assets and liabilities well-matched. With respect to the expected yield on OnRe, the trailing yield has been roughly 10%, and we think the upper bound is probably in the mid-teens. For modeling purposes, something around 12% ± , we believe would be appropriate.
In terms of the overall deal rationale, importantly, we have equity upside in OnRe as it scales, while we are also simultaneously diversifying our revenue and an attractive net yield, which should make both our business and capital structure more durable over time. For those who are interested, you can refer to our Q4 for further detail.
Okay. Thanks for that, Ryan. Next question is also for you. You mentioned strategic transactions that accelerate SOL per share growth. Can you share your framework for evaluating those opportunities, including potential M&A? How do you think about balancing accretion versus flexibility?
Yeah, this is a great question. We evaluate each investment opportunity on a relative value risk-adjusted basis. Depending on the market environment, we may prioritize buying more SOL, buying our stock, minority investments, or M&A. On the SOL side, if our NAV remains dislocated, we will likely continue buying our stock. If our NAV is closer to one, we'll be more focused on scaling SOL and potential debt M&A. For non-debt M&A and minority investments, we are looking for opportunities to deploy our balance sheet in high-quality real-world assets on Solana that are above the native SOL staking yield, as Kyle mentioned in the prepared remarks. Additionally, we wanna ensure we get equity upside as we use our balance sheet to create our own catalyst, and looking to produce win-win outcomes for Forward.
OnRe and ONyc are great examples of this. On the accretion versus flexibility part of the question, we've done a great job preserving flexibility to play offense. And now in this dislocated environment, we can take full advantage, which is evidenced by our annualized 44% SOL for in the money share accretion this quarter. Even though we are now starting to take on some debt, we are still lowly levered, roughly in the low teens on a percentage basis and retain significant financial flexibility. Spot and mNAV remain extremely dislocated. We will continue to be on the offensive while mitigating left tail risk.
Okay. Thank you. This question is for the team. Could the team speak to the strategic logic behind the March transactions? Specifically, what led the team to prioritize a share repurchase at this moment, and how should investors think about the interplay between the Galaxy facility, the buyback, and the cost reduction plan?
I'll take the piece on the debt facility and the buyback, and then Mark, maybe you can handle the cost reduction plan. On the first two pieces, given we're SOL and our stock is trading, we decided to pursue non-dilutive financing, and we structured this master loan agreement with Galaxy, which we believe is very attractive for Forward. We'll continue to use this as a tool to actively lower our cost of capital, which we believe will further accelerate our compounding of SOL per share. The March share buyback was a direct result of the dislocation of our mNAV at the time of the repurchase. Given spot prices of SOL, we decided to repurchase the stock using the Galaxy facility without selling any of our SOL holdings while still keeping all of our staking yields.
Mark, over to you on the cost reduction.
Great. Yeah. Thanks, Ryan. On the $2.4 million reduction from our $72 million in Q1 to our run rate quarterly target of $4.8 million, it's really driven by several sort of distinct and largely permanent changes to our cost structure. As I mentioned earlier, the largest driver to this is the renegotiated services agreement with Galaxy Digital, which significantly reduced the fees we pay for their accounting and operational supports. We've also materially reduced outside legals and marketing spends, we've right-sized our third-party vendor and technology costs, and we've implemented a leaner organizational structure overall, I suppose. We do believe the new targeted run rate is both durable and sustainable.
Having said that, it is important to note that we do have some variable cost elements to our OpEx, primarily the asset management fee that we pay to Galaxy that is tied to a percentage of our AUM. It's probably also important to note that the cost reduction initiatives that we put in place are structural reductions, not one-time cuts or deferrals. Currently, we have no, you know, major reinvestment requirements that would cause these costs to increase on a go-forward basis. In fact, as our revenue grows with our, you know, staking and yield revenue, particularly, we expect, you know, operating leverage to improve further, meaning the absolute cost base would hold steady even as our top line expands.
I suppose it's important to, you know, reiterate, we will not cut costs where it matters strategically, but we are committed to running a lean, disciplined and fiscally conservative operation that compounds value for shareholders. I believe the, you know, the target run rates that, you know, we've forecast, you know, reflects that philosophy and practice.
Okay. Thanks, guys. Ryan, this last one is for you. Given the current discount to NAV, how should shareholders think about future capital allocation between share repurchases, SOL accumulation, and strategic deployment on chain?
For stock, for SOL purchases, we're always looking for ways to drive greater SOL per share, and that's on a risk-adjusted basis. Future capital deployment is highly market environment dependent, but at a high level, we'll continue to capitalize on major dislocations of our stock via those share repurchases. As our mNAV normalizes, we do expect to focus more of our attention back to SOL accumulation. It is worth noting, we do not view the stock buyback and SOL accumulation as mutually exclusive. As for strategic deployment on chain, not all DeFi is created equal, and we're selective about deployment on chain. We believe in using on-chain rails for superior cost and time performance, but also carefully consider various risks, namely smart contract risk. Notably, tokenized real-world assets pose an interesting opportunity set for us.
Unlike truly decentralized digital assets, tokenized RWAs carry the important structural protection. In the event of a smart contract exploit, an issuer can remedy the situation through a burn and remit process. That's a meaningful distinction, in our opinion, that reduces the risk profile. Tokens like ONyc have a durable off-chain yield source and provide non-correlated U.S. dollar-denominated yield, which we believe will be a big growth factor for both us and the Solana ecosystem as a whole.
Okay. Thank you. That concludes our pre-submitted questions. Now I'd like to pass it over to the operator to open up the call for live Q&A.
Certainly. We'll now be conducting a question and answer session. If you'd like to be placed into question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. One moment please while we poll for questions. Our first question today is coming from Fedor Shabalin from B. Riley Securities. Your line is now live.
Thank you very much, operator. Good evening, everyone. My first question is about Solana accumulation, token accumulation. You have emphasized SOL per share accretion as the North Star metric. Can you walk us through your current framework for incremental SOL acquisition beyond staking rewards? I know you already touched on buybacks partially. I just wanna figure out the trajectory going forward in the near term. Thank you.
Sure. In general, again, if our mNAV is significantly below 1x, we do view the buyback as a relatively low risk-adjusted way for us to, you know, drive meaningful share, you know, SOL per share accretion. I think there are also novel ways for us to start accumulating Solana through the use of derivatives, other mechanisms as well, potentially buying locked SOL at a discount, all of which we're always exploring. I think the ONyc token is also an interesting example. To kinda give you the framework, if we can get our overall dollar-denominated revenue base sufficiently high to offset all of our cash costs, inclusive of interest expense, personnel, et cetera, then we actually have a very strong, resilient base for us to further compound SOL per share agnostic of SOL price.
I kinda think about that as, like, the baseline layer, which, you know, OnRe and ONyc is the first step in that direction. I think the rest in terms of SOL versus the stock buyback, it's always gonna be a relative value equation. Again, it's not mutually exclusive between one or the other. Candidly, the stock repurchase obviously has some limitations in terms of our percent of daily trading volume. As we start to exit this bear market, most likely entering into a new bull market in the coming quarters, we will likely look to SOL accumulation as the main, the main instrument to express that view. I'm not sure if I totally answered your question. Feel free to follow up.
No, that's clear. Thank you. A quick follow-up on, quarter- to- date, Solana is up. The question is, has the high collateral value on fwd SOL, created any incremental capacity under the Galaxy facility? Are there any conditions under which you would expand the draw?
Yeah. There are definitely provisions in there without giving specific metrics that may or may not be publicly available, where if the value of the collateral gets sufficiently high, we have the ability to take some collateral back to maintain specific LTV ratios. With that said, yes, it does increase our borrowing capacity full stop on a dollar basis. We would look to utilize based on the opportunity set that is presented to us. Yes, long-winded answer is saying as Solana price goes up, our borrowing capacity increases commensurately. Again, we're actively working on optimizing our weighted average cost of capital.
Just given where Solana is and where our stock is, we still think non-dilutive forms of financing, especially at this interest rate at 2%+ , make a ton of sense for us. Once Solana and our stock and NAV recovers, we look to do more of the traditional convertible debt potentially [press] down the road issuances. At this current time, you are correct, this is our main tool.
Yep. Thank you very much, and continue. Best of luck.
Thank you so much.
Thank you. Our next question today is coming from Devin Ryan from Citizens Bank. Your line is now live.
Hey, guys. This is Neo Eloff on for Devin Ryan. My first question's on agentic AI in the blockchain space and how this will ramp up activity. I guess I would love to hear your guys' thoughts on the topic and how you expect this to evolve in kind of the coming months, whether through trading, payments or lending. If you could touch on how you think SOL is well-positioned here, maybe relative to some of the other blockchains.
Yeah. Hi, everyone. Kyle here. Happy to chime in on this one. I think the first part of the question is kind of just like broadly how do we think about agentic payments, and then secondly, kind of how Solana positioned for that. Let's touch on the first part first here. you know, the opportunity for agents is, like, I think, quite exciting, more in the domain of payments than in trading. Not to say that it's bad for trading, but, like, there's already obviously lots of programmatic trading in the world, right? Market makers, HFT, all that stuff. Today, all of that stuff lives on Solana in a pretty real way.
The Solana blockchain today is the most liquid and highest volume place you can trade, for example, the SOL USD pair, as well as now Bitcoin and ETH are now actually more liquid on Solana blockchain than they are on, for example, Binance or Coinbase. That only happened as of the last few weeks. The reason that's happening is because of kind of this new innovation called Prop AMM that basically allow market makers to quote tighter and in more interesting ways. The agentic part of all of that is actually gonna be a little bit upstream, which is basically you can now use AI agents to actually build these Prop AMMs. I can actually say I'm doing that from firsthand experience.
It's, it's actually publicly documented on Twitter that I am now running a Prop AMM on on-chain, and I've been doing that. What's really cool is, you know, I couldn't have built something like that before. You know, the big unlock for Prop AMM, excuse me, for agentic trading is actually making it easier for people like myself to actually trade natively on-chain. I've been doing it now for probably six weeks or so, and I can tell you the tools are phenomenal. They work really well, and I can quote really effectively on-chain. There's actually a new startup building on Solana called Hadron by Tether that is working to take these ideas and basically make this accessible to truly everybody. That's kind of the trading side of things.
The stuff happening there is really cool. The payment side of things is probably more high profile and probably more interesting for the long-term story. I think kind of the right way to think about that is in two major buckets. One is, you know, imagine you're talking to your AI agent, think ChatGPT, Claude, whatever, and you wanna buy something. Being able to do that payment instantly, for effectively 0 cost, is quite compelling. There's an open standard called x402, written by Coinbase, as well as another one called MPP written by Visa, both of which are live on the Solana blockchain today. There's a ton of developers now building on top of those open protocols.
I expect to see their usage of that start to really ramp up in the back half of this year, as kind of major consumer applications start to adopt this stuff. The other real use case for agentic payments is kind of like, think large scale micropayments, and I think this is particularly compelling given the rise of agentic coding. You know, say if you're using Claude or Codex to build a new application, you can ask it, you know, to go and build, spin up some service, whether it's MongoDB or Supabase or Twilio or whatever.
Implementing all of those using, you know, agentic micropayments for basically use type of billing models, usage-based billing models is a really compelling story for both the developers as well as for the merchants 'cause the merchants get paid in real time. Again, I think this is gonna really take off in the back half of this year as the model providers start to incorporate this stuff. We're really excited about the growth of all of this. That's I think first part of the question. Second part of the question then is really specifically how is Solana positioned? I think here really unequivocally Solana is in the best position of all the major chains. What agentic payments fundamentally need is they need a high throughput, globally available, cheap, fast transactions.
Today, Solana wins on basically all of those fronts. Also the last one is on and off-ramps. This is actually probably the one that people don't appreciate, who look at this, but it's actually maybe the most important. What I mean by on and off-ramps is, you know, today, if you are Cloudflare, if you are Amazon, if you are any of these companies who wanna start implementing a lot of these ideas, it's not enough that, like, there is a stablecoin on-chain. You need to know that as that stablecoin gets moved around from user to user to user, that those people can on and off-ramp that stablecoin quickly and easily, irrespective of which jurisdiction they are in.
What's so powerful about Solana is today Solana, you know, integrates with every major on and off-ramp in the world, every major custodian, every major wallet, every major market maker. It effectively guarantees you're gonna have the most liquidity to get those stablecoins on and off-chain or to move them wherever else you might need to move them beyond the, the straight performance stuff. I think you can see the early signs of Solana winning this today with the adoption of their with x402 on Solana as well as MPP. There's some good dashboards out there that show this data, although it is still pretty early.
Thanks, guys. If I could ask one more question on just kind of asset allocation. As you think about upcoming quarters, is there a long-term target rate you're looking at for, say, native SOL staking versus Forward SOL staking versus kind of other initiatives you're looking at?
Sure. This is Ryan. I'll take that. Currently, our fwdSOL is roughly 25% of our total holdings today. I would expect that to increase over time as we functionally use our, you know, liquid staking token as probably the most efficient form of collateral. There isn't, like, a set number target percentage-wise, but, you know, I would expect that number to increase over time as we utilize and deploy. And was there a second part of your question? Sorry.
No, no. It was just, I guess, native SOL versus Forward versus kind of like other initiatives.
Oh, yeah. I mean, the way that our framework roughly is, you know, we have the 7 million of Solana, which, again, we're extremely convicted and bullish on for all the reasons that Kyle just mentioned. It generates a 7% native staking yield, which is kind of like the engine and kind of our baseline IRR for the business. With deals like OnRe and ONyc, we're actively layering on things that are above that native staking rate of return. In this case, let's say 12%. Because we're able to borrow against our LST at such attractive terms, it's extremely accretive for our business. Because we're borrowing dollars and deploying in also U.S.-denominated cash flows, our assets and liabilities are a lot better matched.
To just walk through an example, if we post $1 of collateral of fwdSOL earning 7%, and its whole price is constant, and we're borrowing, let's say, $0.50 on the dollar just to keep the math simple.
Paying 2%, we're actually only paying $1 of interest expense there, and we're still earning the 7 of SOL staking rewards. Our net on the total collateral package is still $6. It is a small hit to our all-in yield on our assets, but we now have $0.50 of collateral that's unencumbered dollars that we can deploy as we wish. In the example of ONyc, if it's 12%, you know, we're picking up 10% points of spread on that $0.50. It's actually, you know, $5 on top of the seven. We're actually able to increase that up to 12, and it's done in a thoughtful, in a thoughtful asset liability match way that does not increase our left tail.
Again, we don't have specific percentages, but we are actively diversifying and looking to increase our diversification into Real-World Assets on the Solana ecosystem.
Awesome. Thanks, thanks for answering the questions and the insights, guys.
Of course. Thanks for the questions.
Thank you. Next question today is coming from Sam Dufault from Oak Ridge Financial. Your line is now live.
Hey, guys. Thanks for taking my question. Kind of going off the OnRe, I was wondering if you guys were able to maybe list any specific companies currently placing risk with OnRe and maybe how big that underwriting book is today to, you know, generate that 10% spread that was just mentioned.
Yeah, I don't know if we're at liberty to discuss specific counterparties on OnRe's behalf, but what I can say that is publicly available is that their ONyc token, post our deal announcement, has now increased to almost $175 million of public float. At the time of our deal, the pro forma amount was $160 million. In just a week, already showing, you know, 10% growth in the total flow, which is great. Glad to see that we were right in our analysis that we could at least start to create our own catalysts with the OnRe equity platform. Specifically, I think they're accessing the same traditional reinsurance providers that you may or may not have heard of.
Again, I don't think it's appropriate to necessarily go into their counterparties, since it's not our information to share.
Yeah, no, it's totally understandable. Just on the non-debt M&A, any other opportunities in the pipeline that you guys see opportunistically to, you know, kind of, gain SOL per share going forward?
I think from a non-debt M&A perspective or minority investment perspective, again, we're always looking at all available companies and opportunities. I would say more RWAs, that could be, you know, reinsurance, that could be royalties, that could be asset-backed finance. You know, the list goes on. The premise, though, is looking for these opportunities where we can do the following. We can use our balance sheet as a tool to create a catalyst for the company that we are actively investing in, both as an equity partner and as an LP effective investor. Again, just to reiterate on OnRe, we have upside on the equity with OnRe via our Series A investment.
We also effectively LP into their ONyc token or, you know, provide liquidity to their ONyc token, which achieves our stated objective of earning above the native staking yield. Again, because we're borrowing $ at 2%, highly accretive, extremely attractive for us and actually makes the business more durable while also increasing our U.S. dollar cash flow.
Great. Then, on one of the slides, mentioned 44% annualized growth rate on that SOL per share. Are you guys able to break out, you know, how much of that was based off of the buybacks or the non-debt M&A strategies at all?
You know, maybe Mark can provide the specific numbers, but I can tell you the vast majority of that is gonna be driven from the March share repurchase transaction that we publicly announced. I would say the lion's share is definitely gonna be from share repurchases this quarter.
Yeah. It's, like Ryan said, the lion's share is gonna be share repurchases, not just the share transaction in March, but also our programmatic share repurchases that we've been doing over the course of the last, you know, couple of months. That's gonna be the lion's share of it.
Great. Just one quick clarification question? I saw that some of the Galaxy third-party related expenses are being reduced going forward. Are there specific material relationships between the two firms that are maybe ending, or is the relationship going on as similar quarters, just the reduced expenses?
Yeah. We have a services agreement with Galaxy that is gonna come to an end in June, and that's for certain operational resources that they've been providing to Forward, namely sort of financial and accounting services. The other relationship we have with them is them as a, as our asset manager, servicer. We have a asset management agreement with them that will continue. That's a long-term agreement. And like I said, that, you know, that is a variable cost within our SG&A. That's the fees are based on a percentage of our AUM. Those are the two material relationships we have with Galaxy.
Great. Yeah, thanks for answering my questions, guys, and congrats on the quarter.
Thank you.
Thank you.
Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to Kyle for any further closing comments.
All right. Well, everyone, thank you so much for joining us for our Q1 2026 earnings call. The company is doing phenomenal, getting everything in line after the PIPE transaction last year, delivering great SOL per share results, and starting to make strategic acquisitions and investments, as Ryan and Mark talked about. Thank you all for your time, and we'll talk to you soon.
Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.