CRYPTYDE(TYDE) - 2024 Q1 - Quarterly Report

Corporate Structure and Leadership Changes - Eightco Holdings Inc. reported a separation from Vinco Ventures Inc. on June 29, 2022, distributing one share of Eightco for every ten shares of Vinco held[189]. - Kevin O'Donnell resigned as Executive Chairman and Interim CEO on March 17, 2024, with a severance package including $138,000 in back pay and 24 months of base salary[193]. - Paul Vassilakos was appointed as Executive Chairman and CEO on March 17, 2024, with a base salary of $300,000 and potential bonuses up to 75% of his salary[196]. - Brian McFadden's severance agreement includes $146,683 in unpaid salary and a severance payment of $422,500, payable in installments[205]. - The Company will reimburse health insurance premiums for both O'Donnell and McFadden through specified dates following their resignations[206][193]. - The Company has waived certain post-termination obligations related to non-competition for McFadden[207]. - The Board approved compensation for independent directors in 2024, including $40,000 in cash and 42,500 fully-vested restricted shares[201]. - The Company entered into a Severance Agreement with Brett Vroman, providing back pay of $151,615.46 and 24 months of severance based on his base salary[213]. Financial Agreements and Funding - The Company entered into a Series D Loan and Security Agreement for up to $5,000,000 on March 15, 2024[202]. - The Company has committed $3,425,000 from lenders under a Series A Loan and Security Agreement, with a 15% annual interest rate[222]. - A total of $275,000 has been committed by lenders under the Series B Loan and Security Agreement, also with a 15% annual interest rate[227]. - The Company has secured $2,900,000 from lenders under the Series C Loan and Security Agreement, with an 18% annual interest rate[231]. - The Company entered into a Series D Loan and Security Agreement for up to $5,000,000, with $250,000 already committed by a lender[232][233]. - The Company sold 865,856 shares at $0.82 per share in a Private Placement, raising approximately $0.71 million[217]. - Under the At-The-Market Issuance Sales Agreement, the Company may sell shares with an aggregate offering price of up to $2,000,000[214]. Revenue and Financial Performance - For the three months ended March 31, 2024, revenues decreased by $6,269,895 or 39.46% compared to the same period in 2023, primarily due to reduced sales from the inventory management solutions business[251]. - Cost of revenues for the same period decreased by $6,336,565 or 45.03%, attributed to the decline in total revenues from the inventory management solutions business[252]. - Gross profit increased by $66,670 or 3.67% for the three months ended March 31, 2024, due to a decrease in lower margin sales[253]. - Selling, general and administrative expenses decreased by $1,887,472 or 35.28%, primarily due to reductions in professional fees, payroll costs, insurance, and rent[254]. - Restructuring and severance expenses were $1,414,838 for the three months ended March 31, 2024, representing a 100% increase due to severance payments owed to past officers[255]. - Interest expense decreased to $1,198,771 from $2,813,227, largely due to reduced borrowings under convertible notes payable[256]. - Gain on forgiveness of interest was $3,006,896 for the three months ended March 31, 2024, compared to $0 in the same period of 2023[257]. - Gain on forgiveness of earnout was $6,100,000 for the three months ended March 31, 2024, also compared to $0 in the same period of 2023[258]. - Net income for the three months ended March 31, 2024, was $4,947,859, a significant improvement from a net loss of $49,851,140 in the same period of 2023[260]. - As of March 31, 2024, the company had approximately $0.8 million in cash and cash equivalents, which is insufficient to support projected operating requirements for the next 12 months[261]. Compliance and Regulatory Matters - The Company received a Nasdaq deficiency notice for not meeting the minimum bid price requirement of $1.00 per share[235]. - The Company has been granted a hearing to appeal the Nasdaq staff's determination regarding noncompliance with the Minimum Equity Rule[237]. - As of the date of this filing, a total of 866,856 shares have been sold under the ATM Agreement[216].