Corporate Actions - The Company announced a 1-for-5 reverse stock split effective August 16, 2024[103]. - Paul Vassilakos was appointed as Executive Chairman and CEO with a base salary of $300,000 per year and an annual cash bonus opportunity of up to 75% of his base salary[112]. - The Company entered into a Series D Loan and Security Agreement for an amount of up to $5,000,000 on March 15, 2024[118]. - The Company granted fully vested stock options totaling 1,099,670 shares of Common Stock to certain officers, employees, and consultants on March 17, 2024[116]. - The Company entered into a Vroman Severance Agreement, providing Mr. Vroman with back pay of $151,615.46 and 24 months of severance based on his base salary[124]. - The Company has agreed to compensate Mr. Vroman $10,000 per month under a Consulting Agreement, effective January 1, 2024[125]. - The Company has committed $3,425,000 from lenders under a Series A Loan and Security Agreement, with a 15% annual interest rate[131]. - The Company has committed $2,900,000 from lenders under a Series C Loan and Security Agreement, with an 18% annual interest rate[139]. - The Company entered into a Series D Loan and Security Agreement for an amount of up to $5,000,000[140]. Financial Performance - For the three months ended June 30, 2024, revenues decreased by $13,530,140 or 65.85% compared to the same period in 2023, primarily due to reduced sales from the inventory management solutions business[152]. - Cost of revenues for the three months ended June 30, 2024, decreased by $12,778,057 or 70.92%, attributed to the decline in total revenues from the inventory management solutions business[153]. - Gross profit for the three months ended June 30, 2024, decreased by $752,083 or 29.73%, mainly due to lower margin sales in the inventory management solutions business[154]. - Selling, general and administrative expenses decreased by $1,256,335 or 26.63% for the three months ended June 30, 2024, largely due to reductions in professional fees and payroll costs[155]. - Interest expense decreased to $1,323,594 for the three months ended June 30, 2024, from $2,736,333 in the same period of 2023, primarily due to the repayment of convertible notes[156]. - Gain on extinguishment of liabilities was $7,427,193 for the three months ended June 30, 2024, compared to $0 for the same period in 2023, resulting from the settlement of liabilities with the former parent company[158]. - For the six months ended June 30, 2024, revenues decreased by $19,800,035 or 54.34% compared to the same period in 2023, primarily due to decreased sales from the inventory management solutions business[162]. - Cost of revenues for the six months ended June 30, 2024, decreased by $19,114,622 or 59.57%, reflecting the decline in total revenues from the inventory management solutions business[163]. - Net income for the three months ended June 30, 2024, was $4,448,892, a significant improvement from a net loss of ($8,853,248) in the same period of 2023, largely due to other income of $6,132,302[159]. - Gain on forgiveness of earnout was $6,100,000 for the six months ended June 30, 2024, compared to $0 for the same period in 2023, related to the forfeiture of earnout shares by the sellers of Forever 8[168]. - Net income for the six months ended June 30, 2024, was $6,389,855, a significant increase from a net loss of ($58,704,388) for the same period in 2023[173]. - Total other income for the six months ended June 30, 2024, was $11,064,300, compared to a total other loss of $(52,409,953) for the six months ended June 30, 2023[173]. Cash Flow and Equity - The company had stockholders' equity of $13.4 million and approximately $0.3 million in cash and cash equivalents as of June 30, 2024, compared to $5.2 million at December 31, 2023[174]. - Net cash used in operating activities was ($1,163,566) for the six months ended June 30, 2024, an improvement from ($5,672,358) for the same period in 2023[176]. - Net cash used in investing activities was ($5,881) for the six months ended June 30, 2024, compared to ($92,278) for the same period in 2023[177]. - Net cash used in financing activities was ($3,715,313) for the six months ended June 30, 2024, compared to cash provided of $4,559,110 for the same period in 2023[179]. Business Strategy and Market Conditions - The Company has ceased revenue generation from its Web3 Business, focusing instead on its Inventory Solution and Packaging Business[104]. - The Company has a plan for market expansion through its Forever 8 Inventory Cash Flow Solution and Packaging Business[104]. - The Company separated from Vinco Ventures Inc. on June 29, 2022, and is now an independent publicly traded entity[105]. - The Company has entered into various agreements with Vinco to govern the relationship post-separation, including a Tax Matters Agreement[106]. - The company expects to need additional capital to maintain revenues at current levels, with potential equity financing likely to be dilutive to current stockholders[175]. - The company reported a substantial doubt about its ability to continue as a going concern within one year from the date the financial statements are issued[174]. - The impact of general economic conditions, including inflation and rising interest rates, may affect future operations[180]. Compliance and Regulatory Matters - The Company received a Nasdaq deficiency notice for not meeting the minimum bid price requirement of $1.00 per share[143]. - The Company was granted an appeal for continued listing on Nasdaq after not meeting the minimum equity requirement of $2,500,000[144]. - The company has no debt covenants that require certain financial information to be met[181].
Eightco (OCTO) - 2024 Q2 - Quarterly Report