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Eightco Provides Shareholder Update

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Eightco Holdings Inc. (NASDAQ: OCTO) has provided a shareholder update, highlighting significant improvements in its financial condition. The company has eliminated $5.4 million in convertible notes and increased shareholder equity by over $23 million. Eightco's primary focus is now on growing its subsidiary, Forever 8 Fund , which provides inventory solutions for e-commerce sellers and supplies refurbished Apple products in the UK and EU.

Key financial highlights include a Q1 2024 net income of $4.9 million, compared to a $49.9 million loss in the prior year quarter. Revenues were $9.6 million, down from $15.9 million, due to reduced capital for cell phone sales. The company has also improved its gross profit margin to 19.6% and reduced SG&A expenses by 35.3%.

Eightco is working to meet Nasdaq listing requirements, including maintaining a closing bid price of $1.00 per share for 10 consecutive trading sessions. The company plans to seek shareholder approval for a 1-for-5 reverse stock split to achieve this goal.

Positive
  • Elimination of $5.4 million in convertible notes
  • Increase in shareholder equity by over $23 million
  • Q1 2024 net income of $4.9 million, compared to $49.9 million loss in prior year quarter
  • Improvement in gross profit margin to 19.6% from 11.4% in prior year quarter
  • Reduction in SG&A expenses by 35.3% to $3.5 million in Q1 2024
  • Q1 2024 EBITDA of $3.7 million compared to a loss of $46.4 million in prior year quarter
Negative
  • Q1 2024 revenues decreased to $9.6 million from $15.9 million in prior year quarter
  • Operating loss of $2.99 million in Q1 2024
  • Potential reverse stock split to meet Nasdaq listing requirements
  • Current market capitalization of approximately $4.6 million may not reflect company's progress

Insights

Eightco Holdings Inc. has made significant strides in strengthening its financial position. By eliminating $5.4 million in convertible notes and increasing shareholder equity by over $23 million, the company has substantially shored up its balance sheet. This move is a important step in setting the stage for future growth.

The financial highlights from the first quarter of 2024 show a net income of $4.9 million compared to a net loss of $49.9 million the previous year. This dramatic turnaround is due largely to improved operating performance and the elimination of various liabilities. Additionally, the company's gross profit margin increased to 19.6% from 11.4% in the prior year. This is a noteworthy improvement and indicates better cost management and operational efficiency.

However, the revenue figures present a mixed picture. Revenues for the first quarter fell to $9.6 million from $15.9 million the previous year, primarily due to a reduction in capital available for cell phone sales after the repayment of convertible notes. This could be a temporary dip as the company reallocates resources to its core business, Forever 8.

Regarding the Nasdaq listing, the proposal for a reverse stock split could help the company meet the listing requirements. However, such moves can sometimes lead to negative perceptions among investors, as reverse splits are often seen as a last resort to meet listing standards.

In conclusion, the financial restructuring efforts are a step in the right direction, but the decline in revenue needs to be monitored closely. Investors should keep an eye on the company's ability to maintain profitability and sustain growth in its core business segments.

Eightco's pivot to focus on Forever 8 is a strategic move that aligns well with current market trends. The e-commerce sector continues to expand and providing inventory solutions for small to mid-sized sellers is a growing niche. The company's use of a data-driven tool to assess inventory risk levels is a valuable asset. This tech platform's ability to predict inventory needs can help e-commerce sellers avoid the common pitfall of negative cash flow positions.

The expansion into the refurbished Apple products market is also a savvy move. The demand for refurbished products, especially from a reputable brand like Apple, remains high. By ensuring a steady supply of these products, Forever 8 can capitalize on this demand, offering a potentially lucrative revenue stream.

However, the market for refurbished products is competitive and success will depend on maintaining quality and competitive pricing. Additionally, the sector's reliance on supply chain efficiency means that any disruptions could have significant impacts.

Overall, the strategic focus on Forever 8 and its tech-driven inventory solutions presents a positive growth opportunity. Investors should monitor the execution of these plans and the company's ability to navigate market challenges.

Significant Improvement in Financial Condition Allows Renewed Focus on Revenue Growth

Easton, PA, July 16, 2024 (GLOBE NEWSWIRE) -- Eightco Holdings Inc. (NASDAQ: OCTO) (the “Company” or “Eightco”) is pleased to provide an update to its shareholders regarding recent activities and future initiatives for growth.

The Company has made significant progress in the first half of 2024 improving its financial condition, most notably through the elimination of $5.4 million in convertible notes and increasing shareholder equity by over $23 million which allows a renewed focus on the growth of its subsidiary, Forever 8 Fund LLC (“Forever 8”.)

Core Business

During 2024, the Company eliminated significant costs and roles related to the management of various legacy businesses. The Company’s primary focus now is the growth of Forever 8, which operates in two main areas: providing inventory solutions for small to mid-sized e-commerce sellers and supplying refurbished Apple products for sellers in the United Kingdom and European Union.

Forever 8 supports e-commerce sellers by purchasing inventory on their behalf, enabling them to use their capital to grow their brands without the financial strain of maintaining stock. Leveraging Forever 8’s proprietary data-driven tool, it can quickly and confidently assess inventory risk levels, allowing for efficient capital deployment. Forever 8’s predictive inventory solution seeks to ensure optimal inventory levels and capital management, integrating planning, purchasing, and payout into one easy-to-use system. This model helps e-commerce sellers avoid negative cash flow positions that typically arise from the need to continuously supply inventory while awaiting payments.

In the refurbished Apple products market, Forever 8 provides inventory for iPhones and has expanded into other Apple products, including iPads, AirPods, Apple Watches and the iPad Pencil due to high customer demand. Forever 8 buys existing inventory from vendors and commits to purchasing future inventory directly from their suppliers, maintaining specific inventory levels to enhance sales and growth. Vendors are invoiced after sales occur on a monthly basis, at which point Forever 8 charges them its cost plus a markup. Forever 8’s tech platform facilitates this entire process end-to-end, making it seamless and scalable.

Balance Sheet Improvements

During the first half of 2024, Eightco took significant strides to resolve legacy issues and strengthen its balance sheet. More specifically, the Company has improved shareholder equity by over $23 million through the following:

  • Cancellation of $7.4 million of liabilities
  • Cancellation of $15.6 million of additional liabilities to the former members of Forever 8:

    • Earnout consideration (fair value of $6.1 million)
    • $5.4 million in promissory notes
    • $3.0 million in interest obligations
    • $1.1 million of interest obligations converted into 1.4 million shares of the Company’s common stock

The Company also repaid convertible notes which resulted in the elimination of an aggregate of 5,846,627 dilutive shares related to warrants and convertible securities that were cancelled in connection therewith, as well as several one-time accounting events.

Financial highlights and statistics:

  • Significant improvement in first quarter 2024 net income of $4.9 million compared to a net loss of $49.9 million for the prior year quarter, due to improved operating performance and elimination of warrant losses related to a retired convertible note.
  • First quarter 2024 revenues of $9.6 million compared to $15.9 million for the prior year quarter, driven by reduction in capital available for cell phone sales after repayment of the convertible note.
  • First quarter 2024 SG&A of $3.5 million, down 35.3% from $5.3 million in the prior year quarter.
  • First quarter 2024 gross profit margin of 19.6%, compared to 11.4% in the prior year quarter.
  • First quarter 2024 EBITDA of $3.7 million compared to a loss of $46.4 million in the prior year quarter

In late February 2024 the Company completed a private placement priced at $0.82 per share. The Company currently has approximately 8.8 million shares outstanding, resulting in a market capitalization of approximately $4.6 million based on the closing price of the Company’s common stock on July 15, 2024. Management believes the current market capitalization may not fully reflect the Company's substantial progress in enhancing shareholder equity and operational efficiencies described above.

Nasdaq listing

The Company previously announced that a Hearings Panel of the Nasdaq Stock Market has granted the Company’s request for continued listing on The Nasdaq Capital Market, subject to the Company meeting certain conditions by August 23, 2024. These conditions include requiring the closing bid price of the Company’s common stock to equal or exceed $1.00 per share for a minimum of ten (10) consecutive trading sessions. In order to meet the conditions required by the Hearings Panel, the Company will be mailing a proxy statement seeking shareholder approval to effect a reverse stock split of all of the outstanding shares of the Company’s common stock at a ratio of 1-for-5.

Paul Vassilakos, CEO of Eightco and President of Forever 8, said “The Company is excited to focus on prioritizing the Forever 8 business providing inventory capital for e-commerce sellers and refurbished apple product sellers. We have significantly improved our balance sheet and reduced operating expenses and we believe the high demand for our service underscores the value we bring to our customers. "

A reconciliation of EBITDA to the most directly comparable GAAP measure in accordance with SEC Regulation G is set forth below.

  For the Three Months Ended 
  March 31, 
  2024  2023 
Revenues, net $9,619,820  $15,889,715 
Cost of revenues  7,734,058   14,070,623 
Gross profit  1,885,762   1,819,092 
         
Operating expenses:        
Selling, general and administrative expenses $3,461,959  $5,349,431 
Restructuring and severance  1,414,838   - 
Total operating expenses  4,876,797   5,349,431 
Operating loss  (2,991,035)  (3,530,339)
Net income (loss)  4,947,871   (49,851,140)


  For the Three Months Ended 
  March 31, 
  2024  2023 
Net income (loss)  4,947,871   (49,851,140)
Interest (income) expense, net  1,198,771   2,813,227 
Gain on forgiveness of interest  (3,006,896)  - 
Income tax expense  -   - 
Depreciation and amortization  605,796   626,077 
EBITDA  3,745,542   (46,411,836)
Stock-based compensation  144,938   - 
Loss on issuance of warrants      43,541,211 
Gain on forgiveness of earnout  (6,100,000)  - 
Restructuring and severance costs  1,414,838   - 
Adjusted EBITDA  (794,682)  (2,870,625)


About Eightco

Eightco (NASDAQ: OCTO) is committed to growth of its subsidiaries, made up of Forever 8 Fund LLC, 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; the inability to innovate and attract users for Eightco’s and its subsidiaries’ 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 filed with the SEC on April 1, 2024, as amended. 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 Eightco Holdings Inc.'s stock symbol?

Eightco Holdings Inc.'s stock symbol is OCTO, traded on NASDAQ.

How much did Eightco Holdings Inc. (OCTO) improve its shareholder equity in 2024?

Eightco Holdings Inc. (OCTO) improved its shareholder equity by over $23 million in the first half of 2024.

What was Eightco Holdings Inc.'s (OCTO) net income for Q1 2024?

Eightco Holdings Inc. (OCTO) reported a net income of $4.9 million for Q1 2024.

What is the main focus of Eightco Holdings Inc. (OCTO) in 2024?

Eightco Holdings Inc. (OCTO) is primarily focused on growing its subsidiary, Forever 8 Fund , which provides inventory solutions for e-commerce sellers and supplies refurbished Apple products.

What conditions does Eightco Holdings Inc. (OCTO) need to meet for continued Nasdaq listing?

Eightco Holdings Inc. (OCTO) needs to maintain a closing bid price of $1.00 per share for a minimum of 10 consecutive trading sessions by August 23, 2024, to meet Nasdaq listing requirements.

Eightco Holdings Inc.

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