Eightco Completes Non-Dilutive Capital Raise and Second Debt Extension

Rhea-AI Summary

Eightco Holdings Inc. (NASDAQ: OCTO) has completed significant financial transactions through its subsidiary Forever 8 Fund, The company secured a $7.2 million debt extension and raised $3.1 million in new financing, totaling $10.3 million in New Debt to support growth through 2024 and into 2025.

Forever 8, which provides inventory and cash flow management solutions for e-commerce businesses and refurbished Apple product resellers, restructured its existing Series A, B, C, and D promissory notes into new Series A and C notes. Additionally, former Forever 8 members agreed to convert $1.6 million of accrued interest into approximately 485,381 shares of Common Stock at $3.23 per share and defer interest payments until October 30, 2025.

Positive

• Secured $3.1 million in new financing for growth
• Successfully extended $7.2 million of existing debt
• Converted $1.6 million of accrued interest to equity at $3.23 per share
• Deferred interest payments until October 30, 2025, improving short-term cash flow

Negative

• Increased total debt burden to $10.3 million
• Dilution of existing shareholders through conversion of debt to equity
• Heavy reliance on debt financing for business operations

Insights

Financial Analyst

The debt restructuring and capital raise represents a strategic financial maneuver for Eightco. The $7.2 million debt extension coupled with $3.1 million in new financing strengthens their working capital position. The conversion of $1.6 million accrued interest into equity at $3.23 per share, while dilutive, helps preserve cash flow. The deferral of interest payments until October 2025 provides important breathing room. Forever 8's business model, which focuses on inventory financing for e-commerce and Apple product resellers, demonstrates positive unit economics - they purchase at wholesale, markup the inventory and only release it upon sale. This capital-intensive but low-risk model makes efficient use of debt financing.

In simpler terms: Think of this like refinancing a mortgage while also getting a new credit line. The company gets more time to pay existing debt plus new money to grow, without immediately having to pay more interest. They're using this money to buy products at lower prices, then selling them for a profit once their customers need them.

Market Research Analyst

The expansion into refurbished Apple products and Amazon seller financing represents a calculated move into high-demand market segments. The e-commerce sector continues to show robust growth, while the refurbished electronics market is experiencing increased consumer interest due to sustainability concerns and cost-consciousness. Forever 8's model of providing inventory financing addresses a critical pain point for e-commerce businesses - working capital constraints. By managing the inventory acquisition and storage through 3PL warehouses, they're effectively reducing operational complexity for their clients while maintaining control over their collateral.

For the average person: They're helping online sellers who need money to buy inventory, especially in the popular used iPhone market and for Amazon sellers. Instead of these sellers taking loans or using credit cards, Forever 8 buys the products for them and charges a fee when the products sell. It's like having a wealthy partner who covers your inventory costs and shares the profits with you.

$7.2 Million Debt Extension and $3.1 Million New Financing to Fuel Expansion Plans for 2025

Easton, PA, Dec. 20, 2024 (GLOBE NEWSWIRE) -- Eightco Holdings Inc. (NASDAQ: OCTO) (the “Company” or “Eightco”) today announced that its wholly-owned subsidiary, Forever 8 Fund, LLC (“Forever 8”), completed a series of transactions with respect to its outstanding Series A, Series B, Series C and Series D promissory notes (the “Old Debt”) to create new Series A and Series C promissory notes (the “New Debt”) and retire the Old Debt. The transactions resulted in an extension of $7.2 million of existing debt and the raising of an incremental $3.1 million of debt to fund growth through the end of the fourth quarter of 2024 and into 2025. After giving effect to the foregoing transactions, Forever 8 has an aggregate of $10.3 million principal amount of New Debt.

Forever 8 specializes in delivering inventory and cash flow management solutions to e-commerce businesses and refurbished Apple product resellers. Forever 8 leverages debt financing to expand its purchasing power, enabling it to service more clients and drive sustained revenue growth. Inventory is acquired based on customer demand at wholesale prices, stored in third-party logistics (3PL) warehouses and released to clients once sold, with Forever 8 receiving a markup on its cost. This model minimizes risk while maximizing efficiency, making debt financing both highly accretive and essential to Forever 8’s growth model. Accordingly, this debt restructuring helps Forever 8 expand.

Further, on December 19, 2024, the former members of Forever 8, including Paul Vassilakos, the Company’s Chief Executive Officer, entered into an agreement (the December 2024 Seller Notes Amendment) to further amend certain provisions of the Seller Notes issued to the former members of Forever 8 in connection with the Company’s acquisition of Forever 8 in October 2022. Pursuant to the December 2024 Seller Notes Amendment, the Sellers agreed, among other things, to (i) convert approximately $1.6 million of accrued interest on the Seller Notes into approximately 485,381 shares of Common Stock of the Company ($3.23 per share) and (ii) defer interest and any payments due on the Seller Notes until October 30, 2025.

Mr. Vassilakos stated “The extension from our existing lenders, as well as the incremental capital raised demonstrates the confidence our stakeholders have in our business, while providing capital to help 2025 growth. Our offering in the refurbished apple products market and Amazon sellers’ market continues to show significant demand, meaning all capital raised will be put immediately to work.”

The Company is also seeking to secure a larger long-term facility to fuel further growth in 2025.

For additional information on the foregoing transactions and the terms of the New Debt, see the Company’s current report on Form 8-K, which will be filed promptly, and can be obtained, without charge, at the Securities and Exchange Commission’s internet site (http://www.sec.gov).

About Eightco

Eightco (NASDAQ: OCTO) is committed to growth focused around its existing subsidiaries, including Forever 8, an inventory 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 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. 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 is the total value of Eightco's (OCTO) new debt restructuring deal in December 2024?

The total value is $10.3 million, consisting of a $7.2 million debt extension and $3.1 million in new financing.

How many shares were issued in OCTO's December 2024 debt conversion?

Approximately 485,381 shares of Common Stock were issued at $3.23 per share to convert $1.6 million of accrued interest.

When will OCTO's deferred interest payments become due under the new agreement?

Interest payments have been deferred until October 30, 2025.

What is Forever 8's business model under OCTO?

Forever 8 provides inventory and cash flow management solutions to e-commerce businesses and refurbished Apple product resellers, leveraging debt financing to purchase inventory at wholesale prices.

How much new capital did OCTO raise in December 2024?

OCTO raised $3.1 million in new debt financing.