Eightco Announces the Cancellation of the Forever 8 2022 Merger Earnout Consideration

Rhea-AI Summary

Eightco Holdings Inc. (NASDAQ: OCTO) announced the cancellation of the Forever 8 2022 Merger Earnout Consideration, valued at $6.1 million with a potential cash value of up to $37 million. The cancellation is expected to improve the Company's shareholder's equity by over $7 million, strengthening its balance sheet and capital structure.

Positive

• Cancellation of the Earnout is expected to improve the Company's shareholder's equity by over $7 million, enhancing its financial position.

• The cancellation of the Earnout demonstrates the Company's commitment to optimizing its capital structure and balance sheet for future growth opportunities.

Negative

• None.

Insights

Financial Analyst

The cancellation of the earnout consideration from Eightco's acquisition of Forever 8 suggests a strategic financial maneuver that positively affects the company's balance sheet. By removing the contingent liability of up to $37 million, the company directly benefits from an improvement of over $7 million to shareholder's equity. This move can be interpreted as a bolstering of equity, potentially enhancing creditworthiness and signaling financial stability. Investors should note that such adjustments can impact the perceived risk of the company, possibly affecting stock valuation. The decision to forgo the earnout, as asserted by CEO Paul Vassilakos, aligns with his interest as a shareholder and could indicate confidence in the company's growth trajectory without the need for additional earnout incentives.

Corporate Governance Expert

From a corporate governance standpoint, the cancellation of the earnout can reflect positively on Eightco's management practices. The CEO's alignment with shareholder interests, as demonstrated by the cancellation, may reassure investors about the integrity of the management team. Furthermore, it could reduce potential conflicts of interest and streamline the company's financial obligations, leading to a more transparent and accountable governance structure. Investors often view strong governance as a positive indicator for the management's ability to execute strategies effectively and responsibly. The transparency of the transaction and its impact on the company’s equity is a vital piece of information for shareholders monitoring governance quality.

Easton, PA, May 07, 2024 (GLOBE NEWSWIRE) -- Eightco Holdings Inc. (NASDAQ: OCTO) (the “Company” or “Eightco”) today announced that the former owners (“F8 Members”) of Forever 8 Fund, LLC (“Forever 8”) have agreed, effective as of March 17, 2024, to cancel their right to receive certain earnout consideration provided for under the September 2022 Membership Interest Purchase Agreement between the Company and Forever 8 (“Earnout”) whereby the Company acquired Forever 8. The Earnout was fair valued at $6.1 million and had a potential cash value of up to $37 million.

The Company expects that the cancellation of the Earnout, together with the other recently announced transactions, will result in an improvement of over $7 million to the Company’s shareholder’s equity.

“Given the ongoing success and growth of Forever 8 and my alignment as a shareholder, I believe the cancellation of the Earnout puts the Company in a stronger position regarding both its balance sheet and capital structure,” said Paul Vassilakos, CEO of Eightco and President of Forever 8. “I continue to believe that optimizing the Company’s capital structure and balance sheet remains a high priority due to its importance in laying a strong foundation for growth.”

About Eightco

Eightco (NASDAQ: OCTO) is committed to growth of its subsidiaries, made up of Forever 8, an inventory capital and management platform for e-commerce sellers, and Ferguson Containers, Inc., a provider of complete manufacturing and logistical solutions for product and packaging needs, through strategic management and investment. In addition, the Company is actively seeking new opportunities to add to its portfolio of technology solutions focused on the e-commerce ecosystem through strategic acquisitions. Through a combination of innovative strategies and focused execution, Eightco aims to create significant value and growth for its portfolio companies and stockholders.

For additional information, please visit www.8co.holdings

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this press release other than statements of historical fact could be deemed forward looking. Words such as “plans,” “expects,” “will,” “anticipates,” “continue,” “expand,” “advance,” “develop” “believes,” “guidance,” “target,” “may,” “remain,” “project,” “outlook,” “intend,” “estimate,” “could,” “should,” and other words and terms of similar meaning and expression are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements are based on management’s current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: Eightco’s ability to regain and maintain compliance with the Nasdaq’s continued listing requirements; unexpected costs, charges or expenses that reduce Eightco’s capital resources; Eightco’s inability to raise adequate capital to fund its business; Eightco’s inability to innovate and attract users for Eightco’s products; future legislation and rulemaking negatively impacting digital assets; and shifting public and governmental positions on digital asset mining activity. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. For a discussion of other risks and uncertainties, and other important factors, any of which could cause Eightco’s actual results to differ from those contained in forward-looking statements, see Eightco’s filings with the Securities and Exchange Commission (the “SEC”), including in its Annual Report on Form 10-K, as amended, filed with the SEC on April 1, 2024. All information in this press release is as of the date of the release, and Eightco undertakes no duty to update this information or to publicly announce the results of any revisions to any of such statements to reflect future events or developments, except as required by law.

For further information, please contact:
Investor Relations
investors@8co.holdings

FAQ

What did Eightco Holdings Inc. announce regarding the Forever 8 2022 Merger Earnout Consideration?

Eightco announced the cancellation of the Earnout valued at $6.1 million with a potential cash value of up to $37 million.

When was the cancellation of the Earnout effective?

The cancellation of the Earnout was effective as of March 17, 2024.

Who are the former owners of Forever 8 Fund, ?

The former owners of Forever 8 Fund, are referred to as F8 Members.

Who is the CEO of Eightco and President of Forever 8?

Paul Vassilakos is the CEO of Eightco and President of Forever 8.