Eightco (OCTO) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents Eightco Holdings Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, changes in stockholders' equity, and cash flows, along with detailed notes explaining the company's operations, accounting policies, financial position, and recent events Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's assets, liabilities, and stockholders' equity at specific points in time Condensed Consolidated Balance Sheets (Unaudited) | ASSETS (in $) | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | 696,252 | 239,187 | | Accounts receivable, net | 1,087,145 | 1,592,049 | | Inventories, net | 6,292,874 | 7,834,351 | | Prepaid expenses and other current assets | 1,001,170 | 1,002,023 | | Current assets of discontinued operations held for sale | - | 1,798,239 | | Total current assets | 9,077,441 | 12,465,849 | | Property and equipment, net | 7,565 | 5,452 | | Intangible assets, net | 12,678,928 | 13,828,214 | | Goodwill | 22,324,588 | 22,324,588 | | Loan held-for-investment | 4,587,630 | 2,224,252 | | Total assets | 48,676,152 | 50,848,355 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in $) | | | | Accounts payable | 2,395,276 | 2,061,265 | | Accounts payable – related parties | 130,000 | 300,000 | | Accrued expenses and other current liabilities | 2,398,283 | 2,936,580 | | Accrued expenses and other current liabilities – related parties | 3,421,050 | 2,050,684 | | Convertible notes payable – related parties, net | 11,500,000 | 11,500,000 | | Line of credit | 6,955,000 | 6,850,000 | | Line of credit – related parties | 3,425,000 | 3,525,000 | | Due to Former Parent | 222,409 | 480,000 | | Current liabilities of discontinued operations held for sale | - | 107,731 | | Total current liabilities | 30,447,018 | 29,811,260 | | Convertible notes payable – related parties, net of debt discount | 9,734,848 | 9,521,155 | | Total liabilities | 40,181,866 | 39,332,415 | | Total stockholders' equity | 8,494,286 | 11,515,940 | | Total liabilities and stockholders' equity | 48,676,152 | 50,848,355 | - Total assets decreased by $2.17 million (4.27%) from $50.85 million at December 31, 2024, to $48.68 million at June 30, 2025[17] - Total liabilities increased by $0.85 million (2.16%) from $39.33 million at December 31, 2024, to $40.18 million at June 30, 2025[17] - Total stockholders' equity decreased by $3.02 million (26.23%) from $11.52 million at December 31, 2024, to $8.49 million at June 30, 2025[17] Condensed Consolidated Statements of Operations This statement details the company's revenues, costs, and net income or loss over specific reporting periods Condensed Consolidated Statements of Operations (Unaudited) | (in $) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues, net | 7,578,646 | 5,283,593 | 17,492,633 | 13,242,290 | | Cost of revenues | 6,333,350 | 3,959,810 | 15,434,078 | 10,529,497 | | Gross profit | 1,245,296 | 1,323,783 | 2,058,555 | 2,712,793 | | Operating loss | (1,206,536) | (868,165) | (2,622,702) | (4,021,936) | | Net income (loss) from continuing operations | (1,169,519) | 4,333,571 | (3,823,798) | 6,107,706 | | Net income from discontinued operations | - | 115,321 | 105,553 | 282,149 | | Net income (loss) | (1,169,519) | 4,448,892 | (3,718,245) | 6,389,855 | | Net income (loss) per share – basic | (0.38) | 2.55 | (1.38) | 4.66 | | Net income (loss) per share – diluted | (0.38) | 2.15 | (1.38) | 3.76 | - For the three months ended June 30, 2025, net revenues increased by 43.44% YoY to $7.58 million, while gross profit decreased by 5.93% YoY to $1.25 million, primarily due to lower margin product sales[19][184][186] - The company reported a net loss of $(1.17) million for the three months ended June 30, 2025, a significant decrease from a net income of $4.45 million in the prior year, largely due to the absence of a gain on extinguishment of liabilities recognized in 2024[19][192] - For the six months ended June 30, 2025, net revenues increased by 32.10% YoY to $17.49 million, but gross profit decreased by 24.12% YoY to $2.06 million, also attributed to lower margin product sales[19][194][196] - The net loss for the six months ended June 30, 2025, was $(3.72) million, compared to a net income of $6.39 million in the same period last year, primarily due to the absence of significant gains from extinguishment of liabilities and forgiveness of earnout in 2024[19][204] Condensed Consolidated Statements of Comprehensive Loss This statement presents the net income or loss alongside other comprehensive income or loss items not included in net income Condensed Consolidated Statements of Comprehensive Loss (Unaudited) | (in $) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | (1,169,519) | 4,448,892 | (3,718,245) | 6,389,867 | | Foreign currency translation – unrealized gain (loss) | 368,219 | (5,337) | 553,389 | (182,814) | | Comprehensive income (loss) | (801,300) | 4,443,555 | (3,164,856) | 6,207,053 | - Comprehensive loss for the three months ended June 30, 2025, was $(801,300), a significant decline from comprehensive income of $4,443,555 in the prior year, despite a positive foreign currency translation gain of $368,219[20][52] - For the six months ended June 30, 2025, comprehensive loss was $(3,164,856), compared to comprehensive income of $6,207,053 in the same period last year, with foreign currency translation contributing a gain of $553,389[20][52] Condensed Consolidated Statements of Changes in Stockholders' Equity This statement outlines the changes in the company's equity accounts, including common stock and accumulated deficit, over time - Total stockholders' equity decreased from $11,515,940 at January 1, 2025, to $8,494,286 at June 30, 2025, primarily due to net losses incurred during the period[21][22] - Common stock outstanding increased from 2,479,363 shares at December 31, 2024, to 3,044,744 shares at June 30, 2025, mainly due to issuances to satisfy accrued interest to debt holders and for settlement of liabilities to vendors[21][22][129][130] - Additional paid-in capital saw a net increase, while the accumulated deficit significantly widened from $(112,570,049) to $(116,288,293) over the six-month period[21][22] Condensed Consolidated Statements of Cash Flows This statement categorizes cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (Unaudited) | (in $) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | 340,614 | (1,163,566) | | Net cash provided by (used in) investing activities | 397,759 | (5,881) | | Net cash provided by (used in) financing activities | (281,308) | (3,715,313) | | Net increase (decrease) in cash and cash equivalents | 457,065 | (4,884,760) | | Cash and cash equivalents, beginning of the year | 239,187 | 5,247,836 | | Cash and cash equivalents, end of the period | 696,252 | 363,076 | - Net cash provided by operating activities significantly improved to $340,614 for the six months ended June 30, 2025, compared to net cash used of $(1,163,566) in the prior year, driven by adjustments for depreciation, amortization, and changes in assets and liabilities, despite a net loss[24][209] - Net cash provided by investing activities was $397,759, a substantial increase from $(5,881) used in the prior year, primarily due to proceeds from the sale of assets of the Corrugated Business[24][211] - Net cash used in financing activities decreased to $(281,308) from $(3,715,313) in the prior year, mainly due to fewer repayments of debt instruments, particularly convertible notes payable[24][212] Notes to Condensed Consolidated Financial Statements These notes provide essential details and explanations supporting the condensed consolidated financial statements 1. Nature of Operations and Basis of Presentation This note describes the company's business activities, recent operational changes, and the accounting principles used in preparing the financial statements - Eightco Holdings Inc. operates primarily in the Forever 8 Inventory Cash Flow Solution business, which focuses on purchasing inventory for e-commerce retailers[27] - The company ceased its Corrugated Packaging Business on April 7, 2025, following the sale of its assets, and no longer intends to continue its Web3 Business (BTC mining equipment and NFT character set)[27] - The company became an independent, publicly traded entity on June 30, 2022, after spinning off from its former parent, Vinco Ventures, Inc[29] 2. Summary of Significant Accounting Policies This note outlines the key accounting principles, methods, and judgments applied in the preparation of the financial statements - All share and per share amounts in the financial statements have been retrospectively adjusted to reflect a 1-for-5 reverse stock split effective August 8, 2024[34] - Revenue is recognized when performance obligations are satisfied by transferring goods or services to customers, with product sales recognized upon customer receipt[49] - Approximately 86% of consolidated revenues for the three months ended June 30, 2025, were derived from European customers and denominated primarily in Euros, exposing the company to foreign currency risk[56] - As of April 7, 2025, following the sale of the Corrugated Packaging Business, the company operates as a single operating segment focused on Inventory Management Solutions[74] 3. Going Concern This note addresses the company's ability to continue operations, highlighting liquidity challenges and plans to secure additional capital - The company has negative cash flows from operations, an accumulated deficit of $116.3 million as of June 30, 2025, and anticipates further losses, raising substantial doubt about its ability to continue as a going concern for the next 12 months[78] - Current cash and cash equivalents of approximately $0.2 million (as of the report filing date) are not expected to be sufficient to meet operating requirements for the next 12 months[79] - The company plans to reduce costs and raise additional capital, but there is no assurance that such financing will be available on favorable terms or without significant dilution to current stockholders[80] 4. Acquisitions and Divestitures This note details the sale of the Corrugated Packaging Business and its financial impact on discontinued operations - On April 7, 2025, Eightco completed the sale of substantially all assets of its Corrugated Packaging Business (Ferguson Containers, Inc.) for a total consideration of $3,057,835, resulting in a gain on divestiture of $1,231,774[81] Net Income from Discontinued Operations | (in $) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | - | 1,733,420 | 1,773,929 | 3,394,543 | | Net income from discontinued operations | - | 115,321 | 105,553 | 282,149 | - Cash flows from discontinued operations for the six months ended June 30, 2025, showed net cash used in operating activities of $(28,402) and net cash used in investing activities of $(139,921), including a working capital transfer to the buyer of $(125,431)[86] 5. Restructuring and Severance This note reports on the company's restructuring activities and associated severance charges and liabilities - No restructuring and severance charges were incurred for the three and six months ended June 30, 2025, compared to $1,414,838 for the six months ended June 30, 2024[88] - The restructuring and severance liability decreased from $3,060,388 at January 1, 2025, to $3,009,056 at June 30, 2025, due to payments and adjustments[88] 6. Accounts Receivable This note provides a breakdown of trade accounts receivable and the allowance for credit losses from continuing operations Accounts Receivable (Continuing Operations) | (in $) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Trade accounts receivable | 1,087,145 | 2,440,366 | | Less: allowance for credit losses | - | (60,000) | | Less: accounts receivable – discontinued operations | - | (788,317) | | Accounts receivable – continuing operations | 1,087,145 | 1,592,049 | - Accounts receivable from continuing operations decreased by $504,904 (31.71%) from $1,592,049 at December 31, 2024, to $1,087,145 at June 30, 2025[89] - The allowance for credit losses was reduced from $60,000 at December 31, 2024, to $0 at June 30, 2025[39][89] 7. Inventories This note details the composition of inventories, including finished goods and the reserve for obsolescence, for continuing operations Inventories (Continuing Operations) | (in $) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Finished goods | 6,792,874 | 8,435,928 | | Reserve for obsolescence | (500,000) | (500,000) | | Less: inventories – discontinued operations | - | (101,577) | | Inventories – continuing operations | 6,292,874 | 7,834,351 | - Inventories from continuing operations decreased by $1,541,477 (19.68%) from $7,834,351 at December 31, 2024, to $6,292,874 at June 30, 2025[90] - The reserve for obsolescence remained constant at $500,000[90] 8. Prepaid Expenses and Other Current Assets This note outlines the components of prepaid expenses and other current assets, including advances for inventory and escrow receivables Prepaid Expenses and Other Current Assets (Continuing Operations) | (in $) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Advances for inventory purchases | 701,116 | 949,641 | | Escrow receivable | 250,000 | - | | Total other current assets – continuing operations | 1,001,170 | 1,002,023 | - Prepaid expenses and other current assets from continuing operations remained stable at approximately $1.00 million[92] - A new escrow receivable of $250,000 was recorded at June 30, 2025[92] 9. Loan Held-for-Investment This note describes the company's loans held for investment, including new and existing notes, and their terms Loan Held-for-Investment | (in $) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Wattum Management Inc. – 5%, 10/2026 | 2,224,252 | 2,224,252 | | Reichard Containers, LLC – 9.75%, 4/2035 | 2,363,378 | - | | Total loan held-for-investment | 4,587,630 | 2,224,252 | - Total loan held-for-investment increased by $2,363,378 to $4,587,630 at June 30, 2025, primarily due to a new loan to Reichard Containers, LLC, which purchased the assets of Ferguson Containers, Inc[93][94] - The Reichard note is secured by assets of Reichard Containers, LLC, due April 2035, with monthly payments of $32,693[94] 10. Property and Equipment, Net This note presents the net book value of property and equipment for continuing operations and associated depreciation Property and Equipment, Net (Continuing Operations) | (in $) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Furniture and fixtures | 8,418 | 284,877 | | Less: accumulated depreciation | (853) | (5,834,427) | | Property and equipment, net – continuing operations | 7,565 | 5,452 | - Property and equipment, net, for continuing operations increased slightly to $7,565 at June 30, 2025, from $5,452 at December 31, 2024[96] - Depreciation expense for continuing operations was $95 for the three months and $38,087 for the six months ended June 30, 2025[97] 11. Intangible Assets, Net This note details the company's intangible assets, such as customer relationships and developed technology, net of accumulated amortization Intangible Assets, Net | (in $) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Customer relationships | 7,100,000 | 7,100,000 | | Developed technology | 9,700,000 | 9,700,000 | | Trademarks and tradenames | 2,200,000 | 2,200,000 | | Less: accumulated amortization | (6,321,072) | (5,171,786) | | Total intangible assets, net | 12,678,928 | 13,828,214 | - Net intangible assets decreased by $1,149,286 (8.31%) to $12,678,928 at June 30, 2025, from $13,828,214 at December 31, 2024, primarily due to amortization[99] - Amortization expense was $574,643 for the three months and $1,149,286 for the six months ended June 30, 2025[99] 12. Accrued Expenses and Other Current Liabilities This note provides a breakdown of accrued expenses and other current liabilities, including payroll, interest, and related party amounts Accrued Expenses and Other Current Liabilities (Continuing Operations) | (in $) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Payroll and related benefits | 2,926,377 | 3,130,269 | | Accrued interest | 2,206,743 | 936,395 | | Accrued rent | 120,000 | 120,000 | | Less: Accrued expenses and other current liabilities – related parties | 3,421,050 | 2,050,684 | | Accrued expenses and other current liabilities | 2,398,283 | 2,936,580 | - Accrued expenses and other current liabilities (excluding related parties) decreased by $538,297 (18.33%) to $2,398,283 at June 30, 2025, from $2,936,580 at December 31, 2024[102] - Accrued interest significantly increased to $2,206,743 from $936,395, while payroll and related benefits decreased[102] 13. Due to and From Former Parent This note specifies the outstanding balance owed to the company's former parent entity - The net amount due to Former Parent (Vinco Ventures, Inc.) decreased to $222,409 at June 30, 2025, from $480,000 at December 31, 2024[103] 14. Lines of Credit This note details the principal amounts and interest expenses associated with the company's lines of credit Lines of Credit Principal | (in $) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Lines of credit 12% - 18% | 6,955,000 | 6,850,000 | - Principal due under lines of credit increased slightly to $6,955,000 at June 30, 2025, from $6,850,000 at December 31, 2024[104] - Interest expense from lines of credit increased to $246,146 for the three months and $493,790 for the six months ended June 30, 2025, compared to the prior year[104] 15. Lines of Credit – Related Parties This note outlines the principal amounts and interest expenses for lines of credit with related parties Lines of Credit – Related Parties Principal | (in $) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Lines of credit 12% - 18% | 3,425,000 | 3,525,000 | - Principal due under lines of credit – related parties decreased to $3,425,000 at June 30, 2025, from $3,525,000 at December 31, 2024[108] - Interest expense from related party lines of credit increased to $134,887 for the three months and $270,812 for the six months ended June 30, 2025, compared to the prior year[108] 16. Convertible Notes Payable This note discusses the status of convertible notes payable, noting their full repayment in prior periods - All convertible notes payable with the Note Investor (January 2022 Note and March 2023 Note) were repaid in full during 2023 and 2024, with no such notes outstanding as of June 30, 2025[110][112] - Interest expense under these convertible notes was $0 for the three months ended June 30, 2024, and $277,750 for the six months ended June 30, 2024, related to debt discount amortization[111] 17. Convertible Notes Payable – Related Parties This note details the principal and long-term portions of convertible notes payable to related parties and associated interest expense Convertible Notes Payable – Related Parties | (in $) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Notes payable, 12% | 21,484,848 | 21,771,155 | | Less: current portion | 11,500,000 | 11,500,000 | | Notes payable, long-term portion, net | 9,734,848 | 9,521,155 | - Principal due under convertible notes payable – related parties decreased slightly to $21,484,848 at June 30, 2025, from $21,771,155 at December 31, 2024[115] - Interest expense from related party convertible notes was $895,784 for the three months and $1,799,746 for the six months ended June 30, 2025, including debt discount amortization[115] 18. Income Taxes This note explains the company's income tax position, including net operating loss carryforwards and valuation allowances - Income tax benefit was $(28,793) for the six months ended June 30, 2025, compared to $0 in the prior year, as the company has significant net operating loss carryforwards and applies for R&D credits[122][203] - As of June 30, 2025, the company had a federal net operating loss carryforward of approximately $10,667,381, which does not expire but is subject to annual limitations[124] - A full valuation allowance has been recorded against deferred tax assets associated with net operating losses[122] 19. Stockholders' Equity This note details changes in stockholders' equity, including common stock issuances and the accumulated deficit - Under the At-The-Market (ATM) Agreement, the company sold 692,890 shares of common stock for net proceeds of $2,422,910 since inception through June 30, 2025, but no shares were sold during the three and six months ended June 30, 2025[128] - During the six months ended June 30, 2025, the company issued 485,381 shares of common stock valued at $713,511 to satisfy accrued interest to debt holders and 80,000 shares valued at $143,201 to vendors for settlement of liabilities[129] - As of June 30, 2025, there were 3,044,744 shares of common stock outstanding, up from 2,479,363 shares at December 31, 2024[130] 20. Commitments and Contingencies This note describes the company's lease commitments and other potential liabilities - The company leases office space on a month-to-month basis from an affiliated entity and has elected not to recognize right-of-use assets and lease liabilities for short-term leases[131] - Rent expense decreased to $17,521 for the three months and $84,220 for the six months ended June 30, 2025, compared to $124,783 and $190,927, respectively, in the prior year[132] 21. Segment Reporting This note explains the company's operating segments, particularly the shift to a single segment and geographical revenue breakdown - Following the sale of the Corrugated Packaging Business on April 7, 2025, the company now operates as a single operating segment: Inventory Management Solutions[134] Segment Revenues by Geography | (in $) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | North America | 926,130 | 3,555,050 | 3,679,843 | 6,668,172 | | Europe | 6,652,516 | 3,661,963 | 15,586,719 | 9,968,661 | | Total geography and consolidated revenues | 7,578,646 | 7,017,013 | 19,266,562 | 16,636,833 | - Revenues from Europe significantly increased for both the three-month (81.66% YoY) and six-month (56.39% YoY) periods ended June 30, 2025, while North American revenues decreased[142] 22. Subsequent Events This note reports on significant events occurring after the reporting period that may impact the company's financial position - On July 2, 2025, the U.S. Congress enacted the Taxpayer Fairness and Growth Act of 2025, which includes a corporate rate reduction effective fiscal 2026, expected to have a favorable impact on the company's effective tax rate[143] - On August 5, 2025, the company entered into a Forfeiture and Release Agreement with Ridgewood LLC, resulting in the forfeiture of Preferred Units and a Convertible Promissory Note with a principal amount of $371,364, and an expected gain of approximately $400,000[144][145][147] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Eightco Holdings Inc.'s financial condition and operational results for the periods ended June 30, 2025, highlighting key revenue and expense drivers, liquidity challenges, and recent financing activities. It details the shift to a single operating segment and the impact of significant non-operating gains in prior periods on current performance Overview This section introduces Eightco Holdings Inc.'s business, recent name change, and operational focus on inventory cash flow solutions - Eightco Holdings Inc. (formerly Cryptyde, Inc.) changed its name and stock symbol to 'OCTO' on April 4, 2023[149] - The company's primary business is Forever 8 Inventory Cash Flow Solution, which purchases inventory for e-commerce retailers. It no longer intends to generate revenue from its Web3 Business or Packaging Business (sold April 7, 2025)[149] - Eightco became an independent, publicly traded company on June 29, 2022, following a spin-off from Vinco Ventures Inc[149] Financing Activities This section details the company's recent capital raising efforts, including private placements and loan agreements - In February 2024, the company completed a private placement, selling 865,856 shares of common stock for approximately $0.71 million in gross proceeds[151] - Forever 8 entered into Series A, B, and C Loan and Security Agreements in 2023, securing commitments of $2,375,000, $175,000, and $7,225,000 respectively, with interest rates ranging from 15.00% to 18.00% per annum, collateralized by inventory or equipment[157][162][167] - The Hudson Note and Hudson Warrant from the March 2023 Offering were fully repaid and redeemed in 2024, respectively[172][173] Critical Accounting Policies and Significant Judgments and Estimates This section confirms the consistency of critical accounting policies and estimates, referencing the annual report for further details - There have been no changes to the company's critical accounting policies during the three and six months ended June 30, 2025[174] - Critical accounting policies and estimates are regularly discussed with the Audit Committee and are detailed in the Annual Report on Form 10-K for the year ended December 31, 2024[174] Key Components of our Results of Operations This section defines the primary drivers of revenue, cost of revenues, and non-operating items impacting financial performance - Revenues are primarily generated from inventory financing through the Forever 8 subsidiary[175] - Cost of revenues includes inventory, materials, labor, subcontractor, depreciation, overhead, and shipping costs. The company no longer anticipates reselling Bitcoin mining equipment[176] - Non-operating items include interest income/expense, gain on divestiture (from Ferguson Containers sale), gain on extinguishment of liabilities (from settlements), and other income (e.g., interest from Wattum and Reichard notes)[179][180][181][182] Results of Operations This section analyzes the company's financial performance, comparing revenues, costs, and net income/loss across different periods Three Months Ended June 30, 2025 versus Three Months Ended June 30, 2024 This section provides a detailed comparative analysis of financial results for the three-month periods Key Financials (Three Months Ended June 30) | (in $) | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :----------- | :----------- | :----------- | :--------- | | Revenues, net | 7,578,646 | 5,283,593 | 2,295,053 | 43.44% | | Cost of revenues | 6,333,350 | 3,959,810 | 2,373,540 | 59.94% | | Gross profit | 1,245,296 | 1,323,783 | (78,487) | -5.93% | | Operating loss | (1,206,536) | (868,165) | (338,371) | 38.98% | | Net income (loss) | (1,169,519) | 4,448,892 | (5,618,411) | -126.29% | - Revenue increased by 43.44% due to increased customer demand, but gross profit decreased by 5.93% due to a mix of lower-margin product sales[184][185][186] - Net loss of $(1.17) million was primarily driven by the absence of a $6.50 million gain on extinguishment of liabilities recognized in the prior year[183][192] Six Months Ended June 30, 2024 versus Six Months Ended June 30, 2023 This section provides a detailed comparative analysis of financial results for the six-month periods Key Financials (Six Months Ended June 30) | (in $) | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :----------- | :----------- | :----------- | :--------- | | Revenues, net | 17,492,633 | 13,242,290 | 4,250,343 | 32.10% | | Cost of revenues | 15,434,078 | 10,529,497 | 4,904,581 | 46.58% | | Gross profit | 2,058,555 | 2,712,793 | (654,238) | -24.12% | | Operating (loss) income | (2,622,702) | (4,021,936) | 1,399,234 | -34.79% | | Net income (loss) | (3,718,245) | 6,389,855 | (10,108,100) | -158.19% | - Revenue increased by 32.10% due to higher customer demand, but gross profit decreased by 24.12% due to lower-margin product sales[194][195][196] - Net loss of $(3.72) million was primarily due to the absence of significant non-operating gains in 2024, including a $6.10 million gain on forgiveness of earnout and a $6.50 million gain on extinguishment of liabilities[193][201][202][204] Liquidity and Capital Resources This section assesses the company's ability to meet its short-term and long-term financial obligations, highlighting cash position and funding needs - As of June 30, 2025, the company had a net loss of $3.6 million and stockholders' equity of $8.6 million, with approximately $0.7 million in cash and cash equivalents[205] - Current cash and cash equivalents are not sufficient to support projected operating requirements for the next 12 months, raising substantial doubt about the company's ability to continue as a going concern[205] - Additional capital is needed to maintain current revenue levels, and any equity or debt financing may be dilutive or involve restrictive covenants[207] Cash Flows This section analyzes the company's cash generation and usage across operating, investing, and financing activities Summary of Cash Flows (Six Months Ended June 30) | (in $) | 2025 | 2024 | | :--------------------------------------- | :----------- | :----------- | | Operating Activities | 340,614 | (1,163,566) | | Investing Activities | 397,759 | (5,881) | | Financing Activities | (281,308) | (3,715,313) | | Net increase (decrease) in cash and restricted cash | 457,065 | (4,884,760) | - Net cash provided by operating activities improved significantly to $340,614 in 2025 from a net cash outflow in 2024, primarily due to adjustments for non-cash items and changes in working capital[209] - Investing activities generated $397,759 in cash, largely from the sale of the Corrugated Business assets, a reversal from cash used in the prior year[211] - Cash used in financing activities decreased substantially to $(281,308) in 2025, mainly due to fewer debt repayments compared to the $4.92 million repayment of convertible notes in early 2024[212] Known Trends, Events, Uncertainties and Factors That May Affect Future Operations This section discusses external and internal factors that could influence the company's future financial and operational performance - Future operations may be affected by general economic conditions, including inflation, rising interest rates, lower consumer confidence, volatile capital markets, supply chain disruptions, and geopolitical conflicts[214] Contractual Obligations and Commitments This section outlines the company's contractual obligations and commitments, noting the absence of certain debt covenants - The company has no debt covenants that require certain financial information to be met[215] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that the company has no material quantitative or qualitative disclosures regarding market risk for the reported period - The company has no applicable quantitative and qualitative disclosures about market risk[219] Item 4. Controls and Procedures This section addresses the effectiveness of the company's disclosure controls and procedures, identifying a material weakness related to limited accounting personnel and lack of segregation of duties, which impacts timely financial reporting Disclosure Controls and Procedures This section evaluates the effectiveness of the company's disclosure controls and procedures as of the reporting period - Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025[220] - A material weakness exists due to limited accounting personnel, which hinders timely financial reporting, segregation of incompatible duties, and detection of errors[221][222] - The company plans to engage outside consultants in 2025 to strengthen capabilities and remediate existing control deficiencies[222] Changes in Internal Control over Financial Reporting This section reports on any changes in the company's internal control over financial reporting during the period - There were no changes in internal control over financial reporting that materially affected the company's internal control during the three months ended June 30, 2025[223] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is involved in routine legal actions incidental to its business but does not expect any of these to have a material adverse effect on its financial condition or operations - The company is party to routine legal actions, but management does not expect a material adverse effect on its assets, business, cash flow, or results of operations[224] Item 5. Other Information No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - No director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[225] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report, including certifications, XBRL documents, and the cover page interactive data file - The report includes certifications from the CEO and CFO (Sections 302 and 906 of Sarbanes-Oxley Act) and various Inline XBRL documents[226] Signatures The report is duly signed on behalf of Eightco Holdings Inc. by its Interim Chief Executive Officer, Kevin O'Donnell, and Chief Financial Officer, Brett Vroman, as of August 19, 2025 - The report was signed by Kevin O'Donnell, Interim Chief Executive Officer, and Brett Vroman, Chief Financial Officer, on August 19, 2025[230]