Quarterly report
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number: 001-41033 EIGHTCO HOLDINGS INC. (Exact Name of Registrant as Specified in its Charter) Delaware 87-2755739 (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification No.) 101 Larry Holmes Drive, Suite 313 Easton, Pennsylvania 18042 (Address of Principal Executive Offices) (Zip Code) (888) 765-8933 (Registrant’s Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.001 par value per share OCTO The Nasdaq Stock Market LLC Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller Reporting Company ☒ Emerging Growth Company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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☐ Yes ☒ No As of May 15, 2025, there were 3,044,744 shares of the registrant’s common stock outstanding.
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EIGHTCO HOLDINGS INC. TABLE OF CONTENTS Page Number PART I 5 Item 1. Financial Statements 5 Condensed Consolidated Balance Sheets as of March 31, 2025 (Unaudited) and December 31, 2024 5 Condensed Consolidated Statements of Operations for the three months ended March 31, 2025 and 2024 (Unaudited) 6 Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2025 and 2024 (Unaudited) 7 Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2025 and 2024 (Unaudited) 8 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024 (Unaudited) 9 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28 Item 3. Quantitative and Qualitative Disclosures About Market Risk 39 Item 4. Controls and Procedures 39 PART II 40 Item 1. Legal Proceedings 40 Item 1A. Risk Factors 40 Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities 40 Item 5. Other Information 40 Item 6. Exhibits 41 Signatures 42 2
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q for the period ended March 31, 2025 (the “Quarterly Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements relate to future events including, without limitation, our ability to raise capital, our operational and strategic initiatives or our future financial performance. We have attempted to identify forward-looking statements by using terminology such as “anticipates,” “believes,” “expects,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predict,” “should” or “will” or the negative of these terms or other comparable terminology. These statements are only predictions; uncertainties and other factors may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels or activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Our expectations are as of the date this Quarterly Report is filed, and we do not intend to update any of the forward-looking statements after the date this Quarterly Report is filed to confirm these statements to actual results, unless required by law. You should not place undue reliance on forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties, and actual results may differ materially from those in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed in “Risk Factors,” in Part II, Item 1A of this Report as well as information provided elsewhere in this Quarterly Report and our Annual Report on Form 10-K for the year ended December 31, 2024, as amended (the “Annual Report”), which was filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2025. You should carefully consider that information before you make an investment decision. These and other factors discussed above could cause results to differ materially from those expressed in the estimates made by any independent parties and by us. 3
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OTHER PERTINENT INFORMATION Unless the context otherwise indicates, when used in this Quarterly Report, the terms “Eightco,” “we,” “us,” “our,” the “Company” and similar terms refer to Eightco Holdings Inc., a Delaware corporation, and all of our consolidated subsidiaries and variable interest entities. 4
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PART I - FINANCIAL INFORMATION EIGHTCO HOLDINGS INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, December 31, 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 434,427 $ 239,187 Accounts receivable, net 614,020 1,592,049 Inventories, net 6,166,917 7,834,351 Prepaid expenses and other current assets 747,905 1,002,023 Current assets of discontinued operations held for sale 1,862,455 1,798,239 Total current assets 9,825,724 12,465,849 Property and equipment, net 5,579 5,452 Intangible assets, net 13,253,572 13,828,214 Goodwill 22,324,588 22,324,588 Loan held-for-investment 2,224,252 2,224,252 Total assets $ 47,633,715 $ 50,848,355 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 1,730,598 $ 2,061,265 Accounts payable – related parties 180,000 300,000 Accrued expenses and other current liabilities 2,482,275 2,936,580 Accrued expenses and other current liabilities – related parties 2,800,235 2,050,684 Convertible notes payable – related parties, net 11,500,000 11,500,000 Line of credit 6,250,000 6,850,000 Line of credit – related parties 3,525,000 3,525,000 Due to Former Parent 222,409 480,000 Current liabilities of discontinued operations held for sale 36,394 107,731 Total current liabilities 28,726,911 29,811,260 Convertible notes payable, net of debt discount of $0 and $0, respectively - - Convertible notes payable – related parties, net of debt discount of $500,000 and $750,000, respectively 9,611,218 9,521,155 Total liabilities $ 38,338,129 $ 39,332,415 Stockholders’ equity: Preferred stock, $0.001 par value, 10,000,000 shares authorized and 0 shares outstanding at March 31, 2025 and December 31, 2024, respectively - - Common stock, $0.001 par value, 500,000,000 shares authorized and 3,044,744 and 2,479,363 shares outstanding at March 31, 2025 and December 31, 2024, respectively $ 3,045 $ 2,479 Additional paid-in capital 124,272,178 124,129,543 Accumulated deficit (115,118,774) (112,570,049) Foreign currency translation 553,651 368,481 Total stockholders’ attributable to Eightco Holdings Inc. 9,710,100 11,930,454 Non-controlling interest (414,514) (414,514) Total stockholders’ equity 9,295,586 11,515,940 Total liabilities and stockholders’ equity $ 47,633,715 $ 50,848,355 See the accompanying notes to the condensed consolidated financial statements. 5
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EIGHTCO HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) For the Three Months Ended March 31, 2025 2024 Revenues, net $ 9,913,987 $ 7,958,697 Cost of revenues 9,100,728 6,569,687 Gross profit 813,259 1,389,010 Operating expenses: Selling, general and administrative expenses 2,229,425 3,127,943 Restructuring and severance - 1,414,838 Total operating expenses 2,229,425 4,542,781 Operating loss (1,416,166) (3,153,771) Non-operating income (expense): Interest income (expense), net (1,288,804) (1,198,771) Gain on forgiveness of earnout - 6,100,000 Other income 21,898 26,677 Total non-operating income (expense) (1,266,906) 4,927,906 Net income (loss) before income tax expense (2,683,072) 1,774,135 Income tax expense (benefit) (28,793) - Net income (loss) from continuing operations (2,654,279) 1,774,135 Net income from discontinued operations, net of tax 105,553 166,828 Net income (loss) $ (2,548,725) $ 1,940,963 Net loss attributable to non-controlling interest - (12) Net income (loss) attributable to Eightco Holdings Inc. $ (2,548,725) $ 1,940,975 Net income (loss) per share: Net income (loss) per share basic $ (0.84) $ 1.95 Net income (loss) per share diluted $ (0.84) $ 1.42 Weighted average number of common shares outstanding – basic 3,044,744 997,839 Weighted average number of common shares outstanding – diluted 3,044,744 1,369,177 See the accompanying notes to the condensed consolidated financial statements. 6
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EIGHTCO HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) For the Three Months Ended March 31, 2025 2024 Net income (loss) $ (2,548,725) $ 1,940,963 Foreign currency translation – unrealized gain (loss) 185,170 (177,477) Comprehensive income (loss) $ (2,363,555) $ 1,763,486 See the accompanying notes to the condensed consolidated financial statements. 7
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EIGHTCO HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) Common Stock Additional Paid in Non controlling Retained Earnings (Accumulated) Accumulated Other Shares Amount Capital Interest Deficit Income Total Balances, January 1, 2025 2,479,363 $ 2,479 $124,129,543 $ (414,514) $ (112,570,049) $ 368,481 $11,515,940 Issuance of common stock to note holders – interest 485,381 485 (485) - - - - Issuance of common stock to vendors for settlement of liabilities 80,000 81 143,120 - - - 143,201 Foreign currency translation - - - - - 185,170 185,170 Net loss for the three months ended March 31, 2025 - - - - (2,548,725) - (2,548,725) Balances, March 31, 2025 3,044,744 $ 3,045 $124,272,178 $ (414,514) $ (115,118,774) $ 553,651 $ 9,295,586 Balances, January 1, 2024 941,284 $ 941 $108,620,943 $ (414,502) $ (113,278,588) $ 723,303 $(4,347,903) Issuance of common stock - investors 173,171 173 709,827 - - - 710,000 Issuance of common stock - conversions 24,195 24 99,175 - - - 99,199 Issuance of common stock – settlement of cash warrants 50,434 50 206,729 - - - 206,779 Issuance of common stock to noteholders 294,633 295 1,207,705 - - - 1,208,000 Issuance of common stock to board of directors and former employees 77,966 78 262,838 - - - 262,916 Issuance of common stock to consultants 145,779 146 492,547 - - - 492,693 Forgiveness of interest – related parties - - 3,006,896 - - - 3,006,896 Share-based compensation expense - - 33,938 - - - 33,938 Foreign currency translation - - - - - (177,477) (177,477) Net income for the three months ended March 31, 2024 - - - (12) 1,940,975 - 1,940,963 Balances, March 31, 2024 1,707,462 $ 1,707 $114,633,768 $ (414,514) $ (111,337,613) $ 545,826 $ 3,436,004 See the accompanying notes to the condensed consolidated financial statements. 8
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EIGHTCO HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Three Months Ended March 31, 2025 For the Three Months Ended March 31, 2024 Cash flows from operating activities: Net income (loss) $ (2,548,725) $ 1,940,963 Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization – continuing operations 574,672 556,300 Depreciation and amortization – discontinued operations 37,992 49,496 Amortization of debt issuance costs 250,000 587,750 Share-based compensation - 33,938 Amortization of prepaid share-based compensation - 111,000 Gain on forgiveness of earnout - (6,100,000) Changes in assets and liabilities: Accounts receivable 978,029 (419,007) Inventories 1,852,604 809,084 Prepaid expenses and other current assets 254,118 56,933 Accounts payable (450,667) (301,222) Accrued expenses and other current liabilities 180,856 2,138,574 Discontinued operations (129,055) (187,101) Net cash provided by (used in) operating activities 999,824 (723,292) Cash flows from investing activities: Purchases of property and equipment – continuing operations (157) - Purchases of property and equipment – discontinued operations (44,490) - Net cash used in investing activities (44,647) - Cash flows from financing activities: Net proceeds from issuance of common stock - 710,000 Net (repayments) borrowings under line of credit (600,000) 575,000 Repayments under convertible notes payable - (4,915,000) Repayments under convertible notes payable – related parties (159,937) (85,767) Net cash used in financing activities (759,937) (3,715,767) Net decrease in cash and cash equivalents (195,240) (4,439,059) Cash and cash equivalents, beginning of the period 239,187 5,247,836 Cash and cash equivalents, end of the period $ 434,427 $ 808,777 Supplemental disclosure of cash flow information: Cash paid for interest $ 375,637 $ 268,500 Cash paid for income taxes $ - $ - Issuance of common stock to line of credit holders $ - $ 60,000 Issuance of common stock to vendors for future services $ - $ 387,000 Issuance of common stock to employees and directors for settlement of liabilities $ - $ 262,916 Issuance of common stock to vendors for settlement of liabilities $ 143,201 $ 105,693 Issuance of common stock to noteholders for settlement of accrued interest $ - $ 1,148,000 Issuance of common stock to noteholders for settlement of cash warrant liabilities $ - $ 206,779 Forgiveness of interest – related parties $ - $ 3,006,896 Convertible shares under notes payable $ - $ 99,199 See the accompanying notes to the condensed consolidated financial statements. 9
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EIGHTCO HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION As used herein, “Eightco” and the “Company” refer to Eightco Holdings Inc., a Delaware corporation originally incorporated on September 21, 2021 (date of inception) under the laws of the State of Nevada, and subsidiaries. On March 9, 2022, the Company converted to a Delaware corporation pursuant to a plan of conversion entered into with its former parent, Vinco Ventures, Inc. (“Vinco” or “Former Parent”). The Company operates in two main businesses: Forever 8 Inventory Cash Flow Solution and Corrugated Packaging Business. Forever 8 Fund LLC (“Forever 8”), which focuses on purchasing inventory for e-commerce retailers, was acquired by the Company on October 1, 2022, and is part of its Inventory Solution Business. The Company previously sold BTC mining equipment and developed an NFT character set under its Web3 Business but has no intention of continuing this business at this time. The Corrugated Packaging Business manufactures and sells custom packaging for a wide variety of products and helps customers generate brand awareness and promote brand image through packaging. Prior to the Separation (as defined below), the Company was 100% owned by Vinco. As of March 31, 2025, Eightco had three wholly-owned subsidiaries: Forever 8, Ferguson Containers, Inc. (“Ferguson Containers” or “Corrugated Packaging Business”) and BlockHiro, LLC. Ferguson Containers owns 100% of 8co Holdings Shared Services, LLC. Eightco owns 51% of CW Machines, LLC which is consolidated under the voting interest entity model. Under the voting interest entity model, control is presumed by the holder of a majority voting interest unless noncontrolling shareholders have substantive participating rights. Forever 8 owns 100% of Forever 8 UK, Ltd and Forever 8 Fund EU Holdings BV. During 2021, the Former Parent announced it plans to spin-off (the “Separation”) certain of its businesses. The Former Parent has included Ferguson Containers as well as other subsidiaries of the Former Parent (the “Eightco Businesses”) as part of the spin-off. In anticipation of the Separation, the Former Parent contributed its assets and legal entities comprising the Eightco Businesses to facilitate the Separation. As a result of the Separation, the Company became an independent, publicly traded company comprised of the Eightco Businesses on June 30, 2022. On March 29, 2022, Ferguson Containers ownership was assigned by the Former Parent to the Company. This transaction between entities under common control resulted in a change in reporting entity and required retrospective combination of the entities for all periods presented, as if the combination had been in effect since the inception of common control. Accordingly, the consolidated financial statements of the Company reflect the accounting of the combined acquired subsidiaries at historical carrying values, except that equity reflects the equity of Eightco. Basis of Presentation. The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, the unaudited condensed financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the three months ended March 31, 2025 may not be indicative of results for the full year. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes to those statements for the year ended December 31, 2024 included in the Annual Report. The Company is an emerging growth company as the term is used in The Jumpstart Our Business Startups Act, enacted on April 5, 2021 and has elected to comply with certain reduced public company reporting requirements. 10
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EIGHTCO HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reverse Stock Split: On August 8, 2024, the Company filed an amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware to effectuate a 1-for-5 reverse stock split of its Common Stock (the “2024 Reverse Stock Split”). All share, equity award, and per share amounts contained in the consolidated financial statements have been adjusted to reflect the Reverse Stock Splits for all prior periods presented. Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The Company’s significant estimates used in these condensed consolidated financial statements include, but are not limited to, fair value of warrants, revenue recognition and the determination of the economic useful life of depreciable property and equipment. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates. Business Combinations. For business combinations that meet the accounting definition of a business, the Company determines and allocates the purchase price of an acquired company to the tangible and intangible assets acquired, the liabilities assumed, and noncontrolling interest, if applicable, as of the date of acquisition at fair value. Fair value may be estimated using comparable market data, a discounted cash flow method, or a combination of the two. In the discounted cash flow method, estimated future cash flows are based on management’s expectations for the future. Revenues and costs of the acquired companies are included in the Company’s operating results from the date of acquisition. The Company uses its best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the acquisition date, and these estimates and assumptions are inherently uncertain and subject to refinement during the measurement period not to exceed one year from the acquisition date. As a result, any adjustment identified subsequent to the measurement period is included in operating results in the period in which the amount is determined. Discontinued Operations. A component of an entity that is disposed of by sale or abandonment is reported as discontinued operations if the transaction represents a strategic shift that will have a major effect on an entity’s operations and financial results. The results of discontinued operations are aggregated and presented separately in the Consolidated Statement of Operations. Assets and liabilities of the discontinued operations are aggregated and reported separately as assets and liabilities of discontinued operations in the Consolidated Balance Sheet, including the comparative prior year period. Cash flows are reflected as cash flows from discontinued operations within the Company’s Consolidated Statements of Cash Flows for each period presented. Cash and Cash Equivalents. The Company considers all highly liquid, short-term investments with original maturities of six months or less when purchased to be cash equivalents. Accounts Receivable. Accounts receivable are carried at their contractual amounts, less an estimated allowance for credit losses. Management estimates the allowance for credit losses using a loss-rate approach based on historical loss information, adjusted for management’s expectations about current and future economic conditions, as the basis to determine expected credit losses. Management exercises significant judgment in determining expected credit losses. Key inputs include macroeconomic factors, industry trends, the creditworthiness of counterparties, historical experience, the financial conditions of the customers, and the amount and age of past due accounts. Management believes that the composition of receivables at year-end is consistent with historical conditions as credit terms and practices and the client base has not changed significantly. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the allowance for credit losses only after all collection attempts have been exhausted. The allowance for credit losses was $60,000 as of March 31, 2025 and December 31, 2024. Inventories. Inventory is recorded at the lower of cost or net realizable value on a first-in, first-out basis. The Company reduces the carrying value of inventories for those items that are potentially excess, obsolete, or slow moving based on changes in customer demand, technology developments, or other economic factors. Property and Equipment. Property and equipment are stated at cost, net of accumulated depreciation and amortization, which is recorded commencing at the in-service date using the straight-line method over the estimated useful lives of the assets, as follows: 3 to 5 years for office equipment, 5 to 7 years for furniture and fixtures, 6 to 10 years for machinery and equipment, 10 to 15 years for building improvements, 5 years for software, 5 years for molds, 5 to 7 years for vehicles and 40 years for buildings. When fixed assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the statements of comprehensive loss for the respective period. Minor additions and repairs are expensed in the period incurred. Major additions and repairs which extend the useful life of existing assets are capitalized and depreciated using the straight-line method over their remaining estimated useful lives. 11
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EIGHTCO HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Intangible Assets and Long-lived Assets. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The Company assesses the recoverability of its long- lived assets using undiscounted cash flows. If an asset is found to be impaired, the amount recognized for impairment is equal to the difference between the carrying value and the asset’s fair value. We record intangible assets based on their fair value on the date of acquisition. Intangible assets include the cost of developed technology, customer relationships, trademarks and tradenames. Intangible assets are amortized utilizing the straight-line method over their remaining economic useful lives, as follows: 10 years for developed technology, 7 years for customer relationships and 7 years for trademarks and tradenames. The Company reviews long-lived assets and intangible assets for potential impairment annually and when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. In the event the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss is recorded equal to the excess of the asset’s carrying value over its fair value. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. In the event that management decides to no longer allocate resources to an asset, an impairment loss equal to the remaining carrying value of the asset is recorded. The Company did not record any impairment charges related to intangibles assets or long-lived assets during the three months ended March 31, 2025 and 2024, respectively. Goodwill. Goodwill is recorded for the difference between the fair value of the purchase consideration over the fair value of the net identifiable tangible and intangible assets acquired. The Company performs an impairment assessment of goodwill on an annual basis as of December 31st, or whenever impairment indicators exist. In the absence of any impairment indicators, goodwill is assessed for impairment during the fourth quarter of each fiscal year. Judgments regarding the existence of impairment indicators are based on market conditions and operational performance of the business. The Company may assess our goodwill for impairment initially using a qualitative approach to determine whether it is more likely than not that the fair value of these assets is greater than their carrying value. When performing a qualitative test, the Company assesses various factors including industry and market conditions, macroeconomic conditions and performance of our businesses. If the results of the qualitative assessment indicate that it is more likely than not that the goodwill and other indefinite-lived intangible assets are impaired, a quantitative impairment analysis would be performed to determine if impairment is required. The Company may also elect to perform a quantitative analysis of goodwill initially rather than using a qualitative approach. The impairment testing for goodwill is performed at the reporting unit level. The valuation methods used in the quantitative fair value assessment, discounted cash flow and market multiples method, requires our management to make certain assumptions and estimates regarding certain industry trends and future profitability of the Company’s reporting units. If the fair value of a reporting unit exceeds the related carrying value, the reporting unit’s goodwill is considered not to be impaired and no further testing is performed. If the carrying value of a reporting unit exceeds its fair value, an impairment loss is recorded for the difference. The valuation of goodwill is affected by, among other things, the Company’s business plan for the future and estimated results of future operations. Future events could cause the Company to conclude that impairment indicators exist, and, therefore, that goodwill may be impaired. Contingent Liabilities. The Company, from time to time, may be involved in certain legal proceedings. Based upon consultation with outside counsel handling its defense in these matters and the Company’s analysis of potential outcomes, if the Company determines that a loss arising from such matters is probable and can be reasonably estimated, an estimate of the contingent liability is recorded in its condensed consolidated financial statements. If only a range of estimated loss can be determined, an amount within the range that, based on estimates, assumptions and judgments, reflects the most likely outcome, is recorded as a contingent liability in the condensed consolidated financial statements. In situations where none of the estimates within the estimated range is a better estimate of probable loss than any other amount, the Company records the low end of the range. Any such accrual would be charged to expense in the appropriate period. Litigation expenses for these types of contingencies are recognized in the period in which the litigation services were provided. 12
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EIGHTCO HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue Recognition. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, the Company recognizes revenue when it satisfies performance obligations, by transferring promised goods or services to customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for fulfilling those performance obligations. Revenue for product sales is recognized upon receipt by the customer. There are no contract assets or contract liabilities and therefore no unsatisfied performance obligations. One customer represented 86% of total revenues for the three months ended March 31, 2025. Disaggregation of Revenue. The Company’s primary revenue stream include the sale of consumer goods through its inventory management solutions business. The revenue stream for discontinued operations primarily include the sale of corrugated packaging materials. There are no other material operations that were separately disaggregated for segment purposes. Cost of Revenues. Cost of revenues includes freight charges, purchasing and receiving costs, depreciation and inspection costs. Comprehensive income. The Company follows Accounting Standards Codification (“ASC”) 220 in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. For the three months ended March 31, 2025 and 2024, the Company recognized other comprehensive gain (loss) for foreign currency translation of $185,170 and $(177,477), respectively. Foreign Currency Transactions and Translation. Eightco’s functional currency is the United States Dollar (“USD”) and the Forever 8 functional currency in which it operates is the Euro (“EUR”). For the purpose of presenting these condensed consolidated financial statements the reporting currency is USD. Forever 8 assets and liabilities are expressed in USDs at the exchange rate on the balance sheet date, equity accounts are translated at historical rates, and income and expense items are translated at the weighted average exchange rate during the period. The resulting translation adjustments are reported under accumulated other comprehensive income in the stockholders’ equity section of the balance sheets. Transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at the end of the reporting periods. Exchange differences arising on the settlement of monetary items and on translation of monetary items at period-end are included in statement of comprehensive loss. Exchange rates used for the translations are as follows: March 31, 2025 December 31, 2024 Spot USD to EUR $ 0.9259 $ 0.9615 USD to GBP $ 0.7752 $ 0.8000 March 31, 2025 March 31, 2024 Average USD to EUR $ 0.9494 $ 0.9259 USD to GBP $ 0.7916 $ 0.8130 13
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EIGHTCO HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Earnings Per Share. The Company follows ASC 260 when reporting Earnings Per Share (“EPS”) resulting in the presentation of basic and diluted earnings per share. Basic net (loss) income per common share is computed by dividing net (loss) income by the weighted average number of vested common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted average number vested of common shares, plus the net impact of common shares (computed using the treasury stock method), if dilutive, resulting from the exercise of dilutive securities. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. For the three months ended March 31, 2025, the Company had net losses and therefore excluded the dilutive effect of certain securities in its diluted EPS calculation. For the three months ended March 31, 2024, the Company had net income and therefore included the dilutive effect of certain securities in its diluted EPS calculation as their effect would have been anti-dilutive. The following is a reconciliation of the weighted average number of common shares outstanding used in calculating the basic and diluted net income (loss) per share: March 31, 2025 2024 Weighted average shares outstanding – basic 3,044,744 997,839 Warrants for noteholders and placement agents - 44,217 Warrants for equity investors - 145,600 Other shares to be issued - 181,521 Weighted average shares outstanding – diluted 3,044,744 1,369,177 As of March 31, 2025, the Company excluded the common stock equivalents summarized below, which entitle the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive. March 31, 2025 Convertible notes payable issued in acquisition of Forever 8 Fund, LLC 42,222 Total common stock equivalents 42,222 14
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EIGHTCO HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Deferred Financing Costs. Deferred financing costs include debt discounts and debt issuance costs related to a recognized debt liability and are presented in the balance sheet as a direct deduction from the carrying value of the debt liability. Amortization of deferred financing costs are included as a component of interest expense. Deferred financing costs are amortized using the straight-line method over the term of the recognized debt liability which approximates the effective interest method. Income Taxes. The Company accounts for income taxes under the provisions of the FASB ASC Topic 740 “Income Taxes” (“ASC Topic 740”). The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded in the condensed consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company utilizes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s condensed consolidated financial statements as of March 31, 2025 and 2024. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the consolidated statements of comprehensive income. The Company is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. Fair Value Measurements. The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 — quoted prices in active markets for identical assets or liabilities Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) The carrying amounts of the Company’s financial instruments, such as cash, accounts receivable, accounts payable and other current liabilities approximate fair values due to the short-term nature of these instruments. The Company’s long-term debt consists of $21,111,218, of which $11,500,000 is current. The estimated fair value of this debt approximates the carrying value of these instruments, due to the interest rates on this debt approximating current market interest rates. Concentration of Credit Risks. Financial instruments that potentially subject the Company to concentrations of credit risk are cash equivalents and accounts receivable. Cash and cash equivalents are invested in deposits with certain financial institutions and may, at times, exceed federally insured limits. The Company has not experienced any significant losses on its deposits of cash and cash equivalents. In regard to trade receivables, the Company performs ongoing evaluations of its customers’ financial condition as well as general economic conditions and, generally, requires no collateral from its customers. On March 31, 2025, the amount due from two customers represented approximately 23% and 15% of accounts receivable, respectively. Leases. In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). This ASU requires a lessee to recognize a right-of-use asset and a lease liability under most operating leases in its balance sheet. The ASU is effective for annual and interim periods beginning after December 15, 2021. Early adoption is permitted. The Company has adopted ASU 2016-02 as of January 1, 2022. The adoption of the standard did not have a material impact on the balance sheet. 15
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EIGHTCO HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Recently Issued Accounting Pronouncements Adopted. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures. The amendments in this Update improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments in this Update retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. Recent Accounting Pronouncements. Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the Company’s condensed consolidated financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances. Segment Reporting. The Company uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker is the Chairman and Chief Executive Officer (“CEO”) of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. The Company’s primary revenue streams include inventory management solutions and the sale of corrugated packaging materials. Based on the CODM’s evaluation and internal reporting, the Company has two reportable segments: Inventory Management Solutions and Corrugated Packaging. Reclassifications. Certain prior period amounts have been reclassified to conform to the current period presentation, including amounts related to the Corrugated Packaging Business, which was classified as a discontinued operations. These reclassifications had no impact on previously reported net income or stockholders’ equity. 16
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EIGHTCO HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 3. GOING CONCERN The condensed consolidated financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has negative cash flows from operations, incurred a loss since inception resulting in an accumulated deficit of $115,118,774 as of March 31, 2025 and further losses are anticipated in the development of its business. These factors raise substantial doubts about the Company’s ability to continue as a going concern for a period of 12 months from the filing date of this Form 10-Q. As of March 31, 2025, the Company had approximately $0.4 million in cash and cash equivalents as compared to $0.2 million at December 31, 2024. The Company expects that its current cash and cash equivalents, approximately $0.2 million as of the date of this annual report, will not be sufficient to support its projected operating requirements for at least the next 12 months from this date. The Company expects to need additional capital in order to increase revenues above current levels. Any additional equity financing, if available, may not be on favorable terms and would likely be significantly dilutive to the Company’s current stockholders, and debt financing, if available, may involve restrictive covenants. The Company’s ability to access capital when needed is not assured and, if not achieved on a timely basis, will likely have a materially adverse effect on its business, financial condition and results of operations. The Company raised capital in 2024 and will continue to look to reduce costs in 2025 and raise capital as required for its operations. These consolidated condensed financial statements do not include any adjustments that might result from the Company’s inability to continue as a going concern. 4. ACQUISITIONS AND DIVESTITURES Effective October 1, 2022, the Company acquired 100% of the issued and outstanding membership interests of Forever 8. During fiscal year 2024, the Company entered into multiple amendments with the former owners of Forever 8 that significantly altered the original acquisition consideration. These changes included: ● The forgiveness of $5.4 million in principal on the Promissory Notes, ● The waiver of 215,000 non-voting preferred membership units initially included in the acquisition terms, ● The release of $6.1 million in contingent consideration, which was recognized as a gain in other income during the year ended December 31, 2024, and ● The forgiveness and conversion of approximately $5.7 million in accrued interest on the Promissory Notes, resulting in the issuance of approximately 1.9 million shares of the Company’s common stock. The remaining forgiven interest, totaling $3.86 million, was recorded as a capital contribution to additional paid-in capital (APIC) due to the related-party nature of the transaction. These modifications resulted in a substantial reduction in the total consideration payable under the original purchase agreement. Discontinued Operations On November 22, 2024, Eightco Holdings Inc. (the “Company”) entered into an Asset Purchase Agreement (the “APA”) to sell substantially all of the assets of its wholly owned subsidiary, Ferguson Containers, Inc. (the “Corrugated Packaging Business”), to Ferguson Containers, LLC, a New Jersey limited liability company controlled by certain management employees of the Corrugated Packaging Business (the “Buyers”). This sale was completed on April 7, 2025. See Subsequent events Note 23 for more details. As a result of entering into the APA, the Company has classified the operations of Ferguson Containers as discontinued operations in the consolidated financial statements for all periods presented. Assets and liabilities associated with Ferguson Containers have been classified as “held for sale” as of March 31, 2025 and December 31, 2024. 17
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EIGHTCO HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 4. ACQUISITIONS AND DIVESTITURES (continued) The following summarizes the components of the assets and liabilities from discontinued operations to be divested as of March 31, 2025 and December 31, 2024: March 31, December 31, 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 125,431 $ 168,323 Accounts receivable, net 771,162 788,317 Inventories 179,923 101,577 Prepaid expenses and other current assets 144,668 105,249 Property and equipment, net 641,271 634,773 Total assets $ 1,862,455 $ 1,798,239 LIABILITIES Current liabilities: Accounts payable $ 168 $ 2,980 Accrued expenses and other current liabilities 24,998 31,775 Income tax payable 11,228 72,976 Deferred tax liabilities - - Total liabilities $ 36,394 $ 107,731 The following summarizes the components of net income from discontinued operations for the three months ended March 31, 2025 and 2024: Three Months Ended March 31, 2025 2024 Revenues 1,773,929 1,661,123 Cost of revenues 1,276,685 1,164,371 Gross profit: 497,244 496,752 Operating expenses: Selling, general and administrative 393,013 334,016 Restructuring and severance - - Operating income 104,231 162,736 Other (expense) income: Interest (expense) - - Other income 1,322 4,092 Total other income, net 1,322 4,092 Income before income taxes 105,553 166,828 Income tax benefit - - Net income from discontinued operations $ 105,553 $ 166,828 The following summarizes the components of cash flows from discontinued operations for the three months ended March 31, 2025 and 2024: For the Three Months Ended March 31, 2025 For the Three Months Ended March 31, 2024 Cash flows from operating activities: Net income $ 105,553 $ 166,828 Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
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Depreciation and amortization 37,992 49,496 Changes in assets and liabilities: Accounts receivable 17,155 (260,688) Inventories (78,346) 26,359 Prepaid expenses and other current assets (39,419) 15,475 Accounts payable (2,812) 31,029 Accrued expenses and other current liabilities (6,777) 726 Income tax payable (61,748) - Net cash provided by (used in) operating activities (28,402) 29,225 Cash flows from investing activities: Repayments (proceeds) from/to Eightco Holdings, Inc. 30,000 (1,285,000) Purchases of property and equipment (44,490) - Net cash used in investing activities (14,490) (1,285,000) Net decrease in cash and cash equivalents (42,892) (1,255,775) Cash and cash equivalents, beginning of the period 168,323 1,358,806 Cash and cash equivalents, end of the period $ 125,431 $ 103,031 As a result of this classification, prior period amounts have been reclassified to conform to the current period presentation. 18
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EIGHTCO HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 5. RESTRUCTURING AND SEVERANCE Restructuring and severance charges consist of the following for the three months ended March 31, 2025 and 2024, respectively: March 31, 2025 March 31, 2024 Severance expense $ - $ 1,404,038 Rent expense - 10,800 Total restructuring and severance $ - $ 1,414,838 The changes in the carrying amount of restructuring and severance liabilities for the period from January 1, 2025 through March 31, 2025 consisted of the following: Balance, January 1, 2025 $ 3,060,388 Additions and adjustments - Payments and adjustments - Balance, March 31, 2025 $ 3,060,388 6. ACCOUNTS RECEIVABLE Accounts receivable consist of the following at March 31, 2025 and December 31, 2024: March 31, 2025 December 31, 2024 Trade accounts receivable $ 1,445,182 $ 2,440,366 Less: allowance for credit losses (60,000) (60,000) Total accounts receivable 1,385,182 2,380,366 Less: accounts receivable – discontinued operations (771,162) (788,317) Accounts receivable – continuing operations $ 614,020 $ 1,592,049 7. INVENTORIES Inventories consist of the following at March 31, 2025 and December 31, 2024: March 31, 2025 December 31, 2024 Raw materials $ - $ - Finished goods 6,846,840 8,435,928 Reserve for obsolescence (500,000) (500,000) Total inventories 6,346,840 7,935,928 Less: inventories – discontinued operations (179,923) (101,577) Inventories – continuing operations $ 6,166,917 $ 7,834,351 19
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EIGHTCO HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 8. PREPAID EXPENSES AND OTHER CURRENT ASSETS Other current assets consist of the following at March 31, 2025 and December 31, 2024: March 31, 2025 December 31, 2024 Advances for inventory purchases $ 645,951 $ 949,641 Prepaid insurance 58,296 53,601 Deposits 112,494 72,744 Other 75,832 31,286 Total other current assets 892,573 1,107,272 Less: other current assets – discontinued operations (144,668) (105,249) Other current assets – continuing operations $ 747,905 $ 1,002,023 9. LOAN HELD-FOR-INVESTMENT, RELATED PARTY Loan held-for-investment, related party, represents a senior secured promissory note from Wattum Management Inc., a non-controlling member of CW Machines, LLC, a related party. The note bears interest of 5% per annum and matures on October 12, 2026 with the entire outstanding principal and accrued interest due at maturity date. The note is secured by assets of Wattum Management, Inc. Expected credit losses for loan held for investment are based on management’s assessment of credit risk associated with the loan, including consideration of factors such as the financial condition of the entity, historical payment behavior, and any collateral or guarantees provided. The Company determined it was not necessary to record an allowance for credit losses as of March 31, 2025 and December 31, 2024. At March 31, 2025 and December 31, 2024, the principal amount of the loan held for investment was $2,224,252, respectively. 10. PROPERTY AND EQUIPMENT, NET Property and equipment consist of the following at March 31, 2025 and December 31, 2024: March 31, 2025 December 31, 2024 Land $ - $ - Building and building improvements 781,985 781,985 Equipment and machinery 4,866,426 4,821,936 Furniture and fixtures 285,032 284,877 Vehicles 585,854 585,854 6,519,297 6,474,652 Less: accumulated depreciation (5,872,447) (5,834,427) Total property and equipment, net 646,850 640,225 Less: property and equipment, net – discontinued operations (641,271) (634,773) Property and equipment, net – continuing operations $ 5,579 $ 5,452 Depreciation expense was $37,992 and $49,491 for the three months ended March 31, 2025 and 2024, respectively. 20
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EIGHTCO HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 11. INTANGIBLE ASSETS, NET Intangible assets consist of the following at March 31, 2025 and December 31, 2024: Useful Lives March 31, 2025 December 31, 2024 Customer relationships 7 years $ 7,100,000 $ 7,100,000 Developed technology 10 years 9,700,000 9,700,000 Trademarks and tradenames 7 years 2,200,000 2,200,000 19,000,000 19,000,000 Less: accumulated amortization (5,746,428) (5,171,786) Total intangible assets, net $ 13,253,572 $ 13,828,214 Amortization expense was $574,642 and $556,299 for the three months ended March 31, 2025 and 2024, respectively. Amortization expense for the next five years is as follows: For the years ending December 31, 2025 (excluding the three months ended March 31, 2025) $ 1,723,928 2026 2,298,571 2027 2,298,571 2028 2,298,571 2029 2,298,571 Thereafter 2,335,360 $ 13,253,572 21
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EIGHTCO HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 12. GOODWILL The changes in the carrying amount of goodwill for the period from January 1, 2025 through March 31, 2025 consisted of the following: Balance, January 1, 2025 $ 22,324,588 Additions and adjustments - Balance, March 31, 2025 $ 22,324,588 13. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following at March 31, 2025 and December 31, 2024: March 31, 2025 December 31, 2024 Payroll and related benefits $ 3,160,664 $ 3,130,269 Professional fees 94,178 187,378 Accrued settlement liability for equity holders of Forever 8 - - Accrued interest 1,594,466 936,395 Accrued rent 120,000 120,000 Accrued other taxes 13,822 215,006 Other 324,378 429,991 Total accrued expenses and other current liabilities 5,307,508 5,019,039 Less: accrued expenses and other current liabilities – discontinued operations (24,998) (31,775) Accrued expenses and other current liabilities – continuing operations $ 5,282,510 $ 4,987,264 Less: Accrued expenses and other current liabilities – related parties 2,800,235 2,050,684 Accrued expenses and other current liabilities 2,482,275 2,936,580 14. DUE TO AND FROM FORMER PARENT As of March 31, 2025 and December 31, 2024, the amount due to Vinco consists of net amounts related to management fees and borrowings for working capital and financing needs of Eightco as well as other operating expenses that were paid for on behalf of one to the other. As of March 31, 2025 and December 31, 2024, the net amount due to Former Parent was $222,409 and $480,000, respectively. 15. LINES OF CREDIT Principal due under the lines of credit was as follows at March 31, 2025 and December 31, 2024: March 31, 2025 December 31, 2024 Lines of credit 12% - 18% $ 6,250,000 $ 6,850,000 Interest expense under lines of credit was $250,849 and $279,508 for the three months ended March 31, 2025 and 2024, respectively. The lines of credit are collateralized by the inventory of the Company. 22
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EIGHTCO HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 16. LINES OF CREDIT – RELATED PARTIES Principal due under the lines of credit – related parties was as follows at March 31, 2025 and December 31, 2024: March 31, 2025 December 31, 2024 Lines of credit 12% - 18% $ 3,525,000 $ 3,525,000 Interest expense under lines of credit – related parties was $134,075 and $169,962 for the three months ended March 31, 2025 and 2024, respectively. The lines of credit – related parties are collateralized by the inventory of the Company. 17. CONVERTIBLE NOTES PAYABLE During 2023, the Company had two senior secured convertible notes outstanding with an accredited investor (the “Note Investor”): a note issued in January 2022 with an original principal amount of $33,333,333 (the “January 2022 Note”) and a note issued in March 2023 with an original principal amount of $5,555,000 (the “March 2023 Note”). Both notes were issued at an original issue discount and included embedded conversion features and detachable warrants, which resulted in the recognition of significant debt discounts and warrant-related expenses in prior periods. These convertible notes were repaid in full during 2023 and 2024. Interest expense under convertible notes payable was $0 and $277,750, of which $0 and $277,750 was related to amortization of the debt discount, the three months ended March 31, 2025 and 2024, respectively. No convertible notes or related instruments were outstanding as of March 31, 2025 with the Note Investor. 23
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EIGHTCO HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 18. CONVERTIBLE NOTES PAYABLE – RELATED PARTIES The convertible notes payable, related party were issued as part of consideration for the acquisition of Forever 8. The discount was calculated based on the fair value of the instrument as of October 1, 2022. Principal due under the convertible note payable – related parties was as follows at March 31, 2025 and December 31, 2024: March 31, 2025 December 31, 2024 Notes payable, 12% $ 21,611,218 $ 21,771,155 Less: current portion 11,500,000 11,500,000 Notes payable, long-term potion $ 10,111,218 $ 10,271,155 Less: debt discount 500,000 750,000 Notes payable, long-term portion, net $ 9,611,218 $ 9,521,155 Interest expense under convertible notes payable – related parties was $903,962 and $1,071,511, of which $250,000 and $250,000 was related to amortization of the debt discount, for the three months ended March 31, 2025 and 2024, respectively. The Company recognized a capital contribution in additional paid in capital of $3,006,896 related to the forgiveness of accrued interest for the three months ended March 31, 2024. 19. INCOME TAXES Eightco Holdings Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income. Forever 8 Fund, LLC, BlockHiro, LLC and Cryptyde Shared Services, LLC are limited liability companies which are disregarded entities for income tax purposes and are owned 100% by Eightco Holdings Inc. and Ferguson Containers, Inc., respectively. The Company pays corporate federal, state and local taxes on income allocated to it from BlockHiro, LLC and 8co Holdings Shared Services, LLC. CW Machines, LLC is a limited liability company for income tax purposes and is owned 51% by Eightco Holdings Inc. The Company pays corporate federal, state and local taxes on income allocated to it from CW Machines, LLC. Ferguson Containers is taxed as a corporation and pays corporate federal, state and local taxes on income. Forever 8 UK Ltd. is taxed as a corporation and pays foreign taxes on income. F8 Fund EU Holdings BV is taxed as a corporation and pays foreign taxes on income. Income tax (benefit) expense was $(28,793) and $0 for the three months ended March 31, 2025 and 2024, respectively. The Company has recorded a full valuation allowance against its deferred tax assets associated with its net operating losses. There are no unrecognized tax benefits and no accruals for uncertain tax positions. The Company files U.S. income tax returns and a state income tax return. With few exceptions, the U.S. and state income tax returns filed for the tax years ending on December 31, 2021 and thereafter are subject to examination by the relevant taxing authorities. As of March 31, 2025, the Company had a net operating loss carryforward for federal income tax purposes of approximately $10,667,381. These carryforwards were generated in 2022 and later, and therefore do not expire, but are subject to annual limitations under Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions, and may be utilized to offset up to 80% of taxable income in any future period. 24
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EIGHTCO HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 20. STOCKHOLDERS’ EQUITY ATM Agreement On April 25, 2024, the Company entered into an At-The-Market Issuance Sales Agreement (the “ATM Agreement”) with Univest Securities, LLC, as the sales agent (the “Agent”), pursuant to which the Company may offer and sell, from time to time through or to the Agent, as sales agent or principal, shares of common stock having an aggregate offering price of up to $2,000,000. On September 25, 2024, the Company entered into an amendment to this agreement which increased the aggregate offering amount to $2,750,000. The Company will pay the Agent a commission of 3% of the aggregate gross sales prices of the shares of common stock under the ATM Agreement. The Company will also reimburse the Agent for fees and disbursements of counsel to the Agent in an amount not to exceed $37,000 in connection with the signing of the ATM Agreement. The Company intends to use the net proceeds from the sale of shares of common stock pursuant to the ATM Agreement for working capital and general corporate purposes. The ATM Agreement may be terminated (i) by the Company at any time in its sole discretion by giving five days’ written notice to the Agent or (ii) by the Agent, at any time in its sole discretion by giving written notice to the Company. Since entering the agreement through March 31, 2025, the Company had sold 692,890 shares of common stock for net proceeds of $2,422,910 under the ATM Agreement. The Company did not sell any shares of common stock for the three months ended March 31, 2025. Common stock issuances during the three months ended March 31, 2025: On January 21, 2025, the Company issued 485,381 shares of common stock value at $713,511 to satisfy accrued interest to debt holders. On March 31, 2025, the Company issued 80,000 shares of common stock valued at $143,201 as settlement of a liability associated with prior period services performed by a consultant related to investor relations. As of March 31, 2025 and December 31, 2024, the Company had 3,044,744 and 2,479,363 issued and outstanding shares of Common Stock, respectively. As of March 31, 2025 and December 31, 2024, the Company had 0 issued and outstanding shares of Series A Preferred Stock, respectively. 21. COMMITMENTS AND CONTINGENCIES Operating Leases. The Company leases certain office space from an entity affiliated through common ownership under an operating lease agreement on a month-to-month basis. The Company has elected not to recognize right-of-use assets and lease liabilities arising from short-term leases. Rent expense for the three months ended March 31, 2025 and 2024 was $66,699 and $66,144, respectively. Rental payments are expensed in the statements of comprehensive income in the period to which they relate. 25
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EIGHTCO HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 22. SEGMENTING REPORTING The Company’s principal operating segments coincide with the types of products to be sold. The products from which revenues are derived are consistent with the reporting structure of the Company’s internal organization. The Company’s two reportable segments for the three months ended March 31, 2025 and 2024 were the Inventory Management Solutions segment and the Corrugated Packaging Business. The Company’s chief operating decision maker has been identified as the Chairman and CEO, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Segment information is presented based upon the Company’s management organization structure as of March 31, 2025 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to the reportable segments disclosed. There are no inter-segment revenue transactions and, therefore, revenues are only to external customers. The CODM evaluates segment performance based on net revenues, cost of revenues, gross profit, and selling, general and administrative expenses. These items are reviewed by segment. Depreciation and amortization is also monitored by management and presented below. Certain other costs, such as interest expense, other income (expense), and income taxes, are managed on a consolidated basis and not allocated to segments. Segment operating profit is determined based upon internal performance measures used by the chief operating decision maker. The Company derives the segment results from its internal management reporting system. The accounting policies the Company uses to derive reportable segment results are the same as those used for external reporting purposes. Segment operating income excludes certain corporate costs that are not allocated to segments, including corporate-level general and administrative expenses and unallocated shared services. These items are disclosed separately as “Corporate.” Management measures the performance of each reportable segment based upon several metrics, including net revenues, gross profit and operating loss. Management uses these results to evaluate the performance of, and to assign resources to, each of the reportable segments. The Company does not allocate impairment charges, interest expense, income taxes, or other non-operating income or expenses to segments. Segment asset information is disclosed where reviewed by the CODM. 26
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EIGHTCO HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 22. SEGMENTING REPORTING (continued) Segment information available with respect to these reportable business segments for the three months ended March 31, 2025 and 2024 was as follows: For the Three Months Ended March 31, 2025 2024 Revenues: Inventory Management Solutions $ 9,913,987 $ 7,958,697 Corrugated 1,773,929 1,661,123 Total segment and consolidated revenues $ 11,687,916 $ 9,619,820 Cost of revenues: Inventory Management Solutions $ 9,100,728 $ 6,569,687 Corrugated (Discontinued Operations) 1,276,685 1,164,371 Total segment and consolidated cost of revenues $ 10,377,413 $ 7,734,058 Gross profit: Inventory Management Solutions $ 813,259 $ 1,389,010 Corrugated (Discontinued Operations) 497,244 496,752 Total segment and consolidated gross profit $ 1,310,503 $ 1,885,762 Income (loss) from operations: Inventory Management Solutions $ (890,113) $ (794,053) Corrugated (Discontinued Operations) 104,231 162,736 Corporate (526,053) (2,359,718) Total segment and consolidated loss from operations $ (1,311,935) $ (2,991,035) Depreciation and amortization: Inventory Management Solutions $ 574,672 $ 556,299 Corrugated (Discontinued Operations) 37,992 49,497 Total segment and consolidated depreciation and amortization $ 612,664 $ 605,796 Revenues by geography: North America $ 2,753,713 $ 3,313,122 Europe 8,934,203 6,306,698 Total geography and consolidated revenues $ 11,687,916 $ 9,619,820 Segment capital expenditures: Inventory Management Solutions $ 157 $ - Corrugated (Discontinued Operations) 44,490 - Corporate - - Total segment and consolidated capital expenditures $ - $ - Segment total assets: Inventory Management Solutions $ 43,158,404 $ 45,452,208 Corrugated (Discontinued Operations) 1,862,455 1,881,212 Corporate 2,612,856 2,903,451 Total segment and consolidated assets $ 47,633,715 $ 50,236,871 23. SUBSEQUENT EVENTS On April 7, 2025, the Company completed the sale of the Packaging Business to Reichard Corrugated Products LLC and its principals pursuant to the Asset Purchase Agreement dated November 22, 2024. The total consideration includes: ● $557,835 in cash paid at closing, ● $2,500,000 million senior secured promissory note issued by the buyer,
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● and potential earnout payments of up to $250,000 for each of 2025 and 2026 based on defined EBITDA thresholds. The buyer assumed certain liabilities associated with the Corrugated Packaging Business. A side letter agreement established an effective operational date of April 1, 2025, for purposes of accounting and tax allocations. As disclosed in Note 4 to the consolidated financial statements, the Company classified the Corrugated Packaging Business operated under Ferguson Containers as discontinued operations as of March 31, 2025. 27
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. As explained above, unless otherwise indicated, the terms “we,” “us,” “our,” “our Company,” and “the Company” refer to Eightco Holdings Inc., together with its consolidated subsidiaries. The following discussion and analysis of the Company’s financial condition and results of operations should be read together with the Company’s financial statements and related notes appearing elsewhere in this Quarterly Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to the Company’s plans and strategy for the Company’s business and related financing, includes forward-looking statements involving risks and uncertainties and should be read together with the “Cautionary Note Regarding Forwarding- Looking Statements” section of this Quarterly Report. Such risks and uncertainties could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Overview As used herein, “Eightco” and the “Company” refer to Eightco Holdings Inc. and subsidiaries and/or where applicable, its management, a Delaware corporation originally incorporated on September 21, 2021 (date of inception) under the laws of the State of Nevada. On March 9, 2022, the Company converted to a Delaware corporation pursuant to a plan of conversion entered into with the Former Parent. On April 4, 2023, the Company changed its name to Eightco Holdings Inc. from Cryptyde, Inc. and its stock symbol to “OCTO.” The Company is comprised of three main businesses, Forever 8 Inventory Cash Flow Solution, our Web3 Business, which includes the sale of BTC mining hardware, and our Packaging Business. Our Inventory Solution Business, Forever 8 Fund, LLC, a Delaware limited liability company focused on purchasing inventory for e-commerce retailers, which we acquired on October 1, 2022 (“Forever 8”). We no longer intend to generate revenue from our Web 3 Business. Our Packaging Business manufactures and sells custom packaging for a wide variety of products and through packaging helps customers generate brand awareness and promote brand image. On June 29, 2022, the Company separated from its former parent company, Vinco Ventures Inc. (“Vinco”). As previously announced, we concluded a spin-off from Vinco (the “Separation”) and continue operating our Web3 Business, our BTC Mining Hardware Business and our Packaging Business. The Separation occurred concurrently with the distribution (the “Distribution”) of our common stock to stockholders of Vinco as of May 18, 2022 (the “Record Date”) at a ratio of one share of our common stock for every ten shares of Vinco common stock held by the Vinco stockholders. Following the Separation, we are an independent, publicly traded company, and Vinco retains no ownership interest in our Company. In connection with the Separation, we entered into a Separation and Distribution Agreement and other agreements with Vinco to effect the Separation and provide a framework for our relationship with Vinco after the Separation. These agreements provide for the allocation between us and our subsidiaries, on the one hand, and Vinco and its subsidiaries, on the other hand, of the assets, liabilities, legal entities, and obligations associated with the Eightco Businesses, on the one hand, and Vinco’s other current businesses, on the other hand, and govern the relationship between our Company and our subsidiaries, on the one hand, and Vinco and its subsidiaries, on the other hand, following the Separation. In addition to the Separation and Distribution Agreement, the other principal agreements entered into with Vinco include a Tax Matters Agreement and certain commercial agreements. 28
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Employment Agreements Paul Vassilakos Employment Agreement In connection with Mr. Vassilakos’ appointment as the Executive Chairman and Chief Executive Officer of the Company, on March 17, 2024, the Company and Mr. Vassilakos entered into an Employment Agreement (the “Vassilakos Employment Agreement”), which supersedes and replaces the Employment Agreement dated October 16, 2022, by and between Mr. Vassilakos, the Company and Forever 8. The Vassilakos Employment Agreement provides for an initial term of two years, unless earlier terminated in accordance therein, and automatic renewals for successive one (1) year terms unless either party provides timely written notice otherwise. Pursuant to the terms of the Vassilakos Employment Agreement, Mr. Vassilakos will be entitled to a base salary payable at the annualized rate of $300,000 per year (the “Vassilakos Base Salary”). Mr. Vassilakos is eligible for an annual cash bonus opportunity equal to up to 75% of the Vassilakos Base Salary and awards of restricted stock units up to 100% of the Vassilakos Base Salary, subject to the terms and conditions of the Incentive Plan and the Company’s form of restricted stock unit agreement (the “Vassilakos Bonus”), based on certain milestones to be determined in the sole and absolute discretion of the Board. Mr. Vassilakos may also be eligible for additional compensation in the sole and complete discretion of the Board or the Compensation Committee of the Board. In the event the Company terminates Mr. Vassilakos’ employment without cause (as defined in the Vassilakos Employment Agreement), Mr. Vassilakos will receive (i) the Accrued Obligations (as defined in the Vassilakos Employment Agreement) and (ii) severance in the amount of equal to the Vassilakos Base Salary for twelve (12) months, less applicable payroll deductions and tax withholdings. In addition, this termination will cause the vesting of all equity awards subject to the terms of the Incentive Plan held by Mr. Vassilakos and entitle Mr. Vassilakos to reimbursement of premiums associated with the continuation of health insurance benefits provided under the Vassilakos Employment Agreement during the remaining Term of Employment (as defined in the Vassilakos Employment Agreement). A complete copy of the Vassilakos Employment Agreement is included as an exhibit to this Annual Report. Brian McFadden Employment Agreement Brian McFadden was previously employed as the Chief Executive Officer of the Company. On February 26, 2024, the Company and Mr. McFadden entered into General Release and Severance Agreement (the “McFadden Severance Agreement”), effective as of the eighth day following the McFadden Severance Agreement in connection with Mr. McFadden’s resignation as Chief Executive Officer of the Company, effective as of December 31, 2023. Pursuant to the McFadden Severance Agreement, Mr. McFadden was eligible to receive $146,683 in accrued but unpaid base salary through the separation date in four quarterly payments of $36,670.75 each, less all applicable tax withholdings, by December 31, 2024. In consideration of the McFadden Severance Agreement, the release therein and Mr. McFadden’s resignation as Chief Executive Officer of the Company, the Company agreed to provide Mr. McFadden severance pay in the gross amount of amount of $422,500, less all lawful and authorized withholdings and deductions (the “Severance Payment”), which Severance Payment was to be paid in four quarterly installments of $105,625 per each installment, payable at the Company’s option in either cash or Common Stock, with the payment to be made as follows: (i) as of the Effective Date of the separation, on which such date Mr. McFadden shall be granted, in lieu of cash, 128,811 fully-vested restricted shares of the Common Stock at a price of $0.82 per share, which such shares of Common Stock subject to the terms and conditions of the Company’s 2022 Long-Term Incentive Plan (the “Plan”), and as of each of (ii) April 1, 2024, (iii) July 1, 2024, and (iv) October 1, 2024, payable at the Company’s option, in either cash or Common Stock. The shares of Common Stock to be issued to Mr. McFadden under installments (ii), (iii) and (iv), if applicable, shall be fully vested and the number of shares to be issued shall be determined based on the volume weighted average trading price of the Common Stock on the principal exchange on which the Common Stock is listed or admitted to trade during the period of 10 trading days immediately prior to the date of such issuance. 29
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Pursuant to the McFadden Severance Agreement, the Company also agreed to reimburse to Mr. McFadden the premiums associated with the continuation of Mr. McFadden’s health insurance for the period commencing on the Separation Date through December 31, 2024, pursuant to applicable law, and approved but unpaid business expenses through the Separation Date within 30 days following the Effective Date of the separation. Pursuant to the terms of the McFadden Severance Agreement, Mr. McFadden was to remain a director of the Company’s board from the Separation Date through March 2024, at which time Mr. McFadden would resign from the Board. On March 17, 2024, the Board approved the entry by the Company into the First Amendment to the McFadden Severance Agreement to amend Mr. McFadden’s end date of service on the Board to March 17, 2024. A copy of the complete McFadden Severance Agreement is included as an exhibit to this Annual Report. Brett Vroman Employment Agreement Pursuant to the terms of the Vroman Employment Agreement, Mr. Vroman is employed as the Chief Financial Officer of the Company. Mr. Vroman’s employment under the Vroman Employment Agreement was to last until September 27, 2024, unless earlier terminated pursuant to the terms of the agreement. Pursuant to the terms of Mr. Vroman’s employment agreement, Mr. Vroman was to receive, subject to approval by the Board, an annual grant of 180,000 restricted stock units convertible into shares of the Company’s common stock, which shall be immediately vested and subject to the terms and conditions of the Company’s 2022 Long-Term Incentive Plan. This reflects an increase from the 135,000 shares provided to Mr. Vroman under the March Vroman Agreement. Mr. Vroman will be entitled to a base salary payable at the annualized rate of $292,000 per year (the “Vroman Base Salary”), which reflects an increase from the $250,000 provided to Mr. Vroman under the March Vroman Agreement. Mr. Vroman is eligible for an annual cash bonus opportunity equal to 100% of the Vroman Base Salary (the “Vroman Bonus”) based on the achievement of performance goals as determined by the Company’s audit committee and the Board. The Vroman Bonus reflects a decrease on a percentage basis from the maximum 150% of base salary provided for in the March Vroman Agreement. In addition, Mr. Vroman shall under some circumstances be entitled to receive additional shares of the Company’s common stock contingent upon the satisfaction of certain additional performance goals. Mr. Vroman shall be entitled to receive a maximum total of 990,000 shares upon full satisfaction of certain corporate growth achievements based upon a review of the Company’s audited financial statements and subject to the approval of the Board. This reflects an increase over the March Vroman Agreement, which provided that Mr. Vroman would be eligible to receive a maximum of 450,000 shares in connection with revenue growth. Mr. Vroman shall be eligible to receive a one-time bonus of 180,000 shares in the event that the Company achieves a positive cash flow based on a review of the Company’s audited financial statements and subject to the review of the Board. The March Vroman Agreement provided for a substantially similar bonus in connection with cash flow. Mr. Vroman shall be eligible to receive a bonus of a maximum aggregate of 1,600,000 shares in the event that certain market capitalization milestones are met based on a review of the Company’s audited financial statements and subject to approval by the Board. This reflects an increase above the maximum aggregate of 1,575,000 shares provided for in connection with meeting market capitalization milestones under the March Vroman Agreement. Subsequent to receiving the maximum aggregate 1,600,000 shares provided for under the first three market capitalization milestones, Mr. Vroman will be eligible to receive additional bonuses of 135,000 shares for each doubling in market capitalization of the Company over the market capitalization recorded at the prior bonus threshold, provided such increase is sustained for a period of at least three consecutive trading days. Though specific milestone thresholds and timing requirements vary, the March Vroman Agreement contained a substantially similar provision with respect to a continuing market capitalization bonus. Mr. Vroman may also be eligible for additional compensation in the sole and complete discretion of the Board. Mr. Vroman will be eligible to participate in all health, medical, dental and life insurance policies offered to employees of the Company, and the Company will pay all applicable premiums. The Company will reimburse Mr. Vroman up to $10,000 per year as a car allowance, reimburse Mr. Vroman up to $2,500 for home office expenses and reimburse Mr. Vroman for all reasonable out-of-pocket expenses incurred by him in the conduct of the Company’s business. The Vroman Employment Agreement provides Mr. Vroman with four (4) weeks of paid vacation and five (5) days of paid personal time. The Vroman Employment Agreement also provides Mr. Vroman with liability insurance coverage and shall reimburse certain financial planning expenses incurred by Mr. Vroman. All terms provided in this paragraph are substantially similar to those provided in the March Vroman Agreement. 30
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In the event the Company terminates Mr. Vroman’s employment without cause (as defined in the Vroman Employment Agreement), Mr. Vroman will receive (i) the Accrued Obligation (as defined in the Vroman Employment Agreement) and (ii) severance in the amount of equal to the Vroman Base Salary for twenty-four (24) months. In addition, this termination will cause the vesting of all Eightco common stock held by Mr. Vroman and entitle Mr. Vroman to reimbursement of premiums associated with the continuation of health insurance benefits provided under the Vroman Employment Agreement during the remaining Term of Employment (as defined in the Vroman Employment Agreement). On February 26, 2024, the Company and Brett Vroman entered into General Release and Severance Agreement (the “Vroman Severance Agreement”), effective as of the eighth date following the Vroman Severance Agreement in connection with the termination of the amended and restated employment agreement, by and between the Company and Mr. Vroman, effective as of September 27, 2022. Pursuant to the Vroman Severance Agreement, as of the Separation Date, the Vroman Employment Agreement shall terminate, and no party shall have any further obligation or liability thereunder except as related to any obligations that survive employment termination, including but not limited to the obligations set forth under the Employee Confidential Disclosure, Invention Assignment, Non- Competition, Non-Solicitation and Non-Interference Agreement, attached to the Vroman Employment Agreement. Pursuant to the Vroman Severance Agreement, the Company will provide Mr. Vroman with (i) back pay wages through the Separation Date in the amount of $151,615.46, less all lawful and authorized withholdings and deductions, to be paid as soon as practicable following the Vroman Effective Date and (ii) severance of 24 months of Mr. Vroman’s base salary, less all lawful and authorized withholdings and deductions, under the Vroman Employment Agreement. Pursuant to the Vroman Severance Agreement, the Company shall also reimburse to Mr. Vroman the premiums associated with the continuation of Mr. Vroman’s health insurance for the period commencing on the Separation Date through December 31, 2024, pursuant to applicable law, expenses in accordance with the Company’s expense reimbursement policy, and the full vesting of any earned shares of Common Stock. The Vroman Severance Agreement also provides for a mutual waiver and release of any claims in connection with Mr. Vroman’s employment, separation and departure from the Company, and for certain customary covenants regarding confidentiality. Additionally, on February 22, 2024, the Company and CXO Lite, LLC, a limited liability company organized under the laws of Pennsylvania, of which Mr. Vroman is the sole member, entered into a consulting agreement (the “CXO Lite Consulting Agreement”) pursuant to which Mr. Vroman shall be engaged and continue to serve the Company as its Chief Financial Officer. A copy of the complete Vroman Severance Agreement and CXO Lite Consulting Agreement are included as an exhibits to this Annual Report. Kevin O’Donnell Employment Agreement and Separation Agreement On February 22, 2024, the Board appointed Kevin O’Donnell as Interim Chief Executive Officer of the Company, effective as of the Separation Date, to serve until a successor is chosen and qualified, or until his earlier resignation or removal. On March 17, 2024, Kevin O’Donnell resigned as Executive Chairman and Interim Chief Executive Officer of the Company, effective immediately. Mr. O’Donnell’s resignation was not the result of any disagreement regarding any matter relating to the Company’s operations, policies, or practices. In connection with Mr. O’Donnell’s resignation from these positions, on March 17, 2024, the Company and Kevin O’Donnell entered into a General Release and Severance Agreement (the “O’Donnell Severance Agreement”), effective as of March 17, 2024 (the “O’Donnell Effective Date”). The O’Donnell Severance Agreement terminated of the amended and restated employment agreement, by and between the Company and Mr. O’Donnell, effective as of October 21, 2022 (the “O’Donnell Employment Agreement”). Pursuant to the O’Donnell Severance Agreement, as of the O’Donnell Effective Date, the O’Donnell Employment Agreement shall terminate forever, and no party shall have any further obligation or liability thereunder except as related to any obligations that survive employment termination, including but not limited to the obligations set forth under the Employee Confidential Disclosure, Invention Assignment, Non-Competition, Non- Solicitation and Non-Interference Agreement, attached to the O’Donnell Employment Agreement. Pursuant to the O’Donnell Severance Agreement, the Company will provide Mr. O’Donnell with (i) back pay wages through the Separation Date in the amount of $138,000, less all lawful and authorized withholdings and deductions, to be paid as soon as practicable following the O’Donnell Effective Date and (ii) severance equal to 24 months of Mr. O’Donnell’s base salary, less all lawful and authorized withholdings and deductions, under the O’Donnell Employment Agreement. Pursuant to the O’Donnell Severance Agreement, the Company shall also provide Mr. O’Donnell with (i) reimbursement of the premiums associated with the continuation of Mr. O’Donnell’s health insurance for the period commencing on the Separation Date through and including September 27, 2024, pursuant to applicable law, (ii) reimbursement of expenses in accordance with the Company’s expense reimbursement policy, and (iii) the full vesting of any earned, outstanding and unvested shares of Common Stock subject to the Plan (as define below). The O’Donnell Severance Agreement also provides for a mutual waiver and release of any claims in connection with Mr. O’Donnell’s employment, separation and departure from the Company, and for certain customary covenants regarding confidentiality. 31
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Recent Financings February 2024 Private Placement On February 26, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors (the “Investors”), pursuant to which the Company sold to the Investors an aggregate of 865,856 shares (the “Shares”) of the Company’s common stock at a purchase price of $0.82 per Share (the “Private Placement”). The Company received aggregate gross proceeds from the Private Placement of approximately $0.71 million. The Shares are being offered and sold in reliance on the exemption from registration under the Securities Act of 1933, as amended, provided by Section 4(a)(2) and Regulation D promulgated thereunder for transactions not involving a public offering. The Purchase Agreement contains representations and warranties of the Company and the Investors that are typical for transactions of this type. The Purchase Agreement also contains covenants on the part of the Company that are typical for transactions of this type. Series A Financing On May 30, 2023, Forever 8 (the “Borrower”) entered into a Loan and Security Agreement (the “Agreement”) with several individuals, financial institutions and entities as lenders. Under the terms of the Agreement, each lender will severally (and not jointly) make available to Borrower, in an amount not to exceed its respective Commitment, a Loan Advance amount to be determined by the lender (as such amount may be increased, the “Aggregate Commitment”) in the aggregate, of which (x) a certain amount will be deposited into an account of the Borrower in accordance with its written instructions (the “Initial Loan Advance”) and (y) the remaining balance of the Aggregate Commitment after deducting the Initial Loan Advance shall be deposited into the Escrow Account (the “Escrow Funds”). The Borrower may, at any time, request an advance for all or a portion of the Escrow Funds (each such advance, a “Subsequent Draw”). The Borrower issued a Promissory Note to each of the lenders in the amount of the lender’s respective Initial Loan Advance. The principal balance of the Initial Loan Advance and each Subsequent Draw shall bear interest thereon from the Closing Date and applicable Advance Date, respectively, at 15.00% per annum. The Borrower shall pay each lender, according to its Applicable Percentage, an unused commitment fee on the actual daily amount of the Unused Commitment Amount during the immediately preceding calendar quarter at the rate of five percent (5.00%) per annum (the “Unused Commitment Fee”). In the event any payment is not paid on or within five (5) Business Days of the scheduled payment date, an amount equal to two percent (2.00%) of the past due amount shall be payable on demand, in addition to interest accruing. In addition, upon the occurrence and during the continuation of an Event of Default hereunder, the Initial Loan Advance and all Subsequent Draws, including principal, interest, compounded interest, and professional fees thereupon, shall upon the election of the lenders, bear interest at the Interest Rate, plus five (5) percentage points. In the event any interest is not paid when due hereunder, delinquent interest shall be added to principal and shall bear interest on interest, compounded. 32
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As security for the prompt and complete payment when due (whether on the payment dates or otherwise) of all the Secured Obligations, Borrower granted to the lenders a security interest in all of Borrower’s right, title, and interest in and to all Inventory or Equipment and machinery, in each case, purchased (or refinanced) with the proceeds of the Initial Loan Advance and any Subsequent Draw, and, to the extent not otherwise included, all Proceeds of each of the foregoing and all products, additions, increases and accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing. As of the date of this filing, $2,375,000 has been committed by the lenders. Series B Financing On October 6, 2023, the Borrower entered into a Series B Loan and Security Agreement (the “Series B Agreement”) with an individual as lender. Under the terms of the Series B Agreement, the lender will make available to Borrower, in an amount not to exceed its respective Commitment, a Loan Advance amount to be determined by the lender (as such amount may be increased, the “Aggregate Commitment”) in the aggregate, of which (x) a certain amount will be deposited into an account of the Borrower in accordance with its written instructions (the “Initial Loan Advance”) and (y) the remaining balance of the Aggregate Commitment after deducting the Initial Loan Advance shall be deposited into the Escrow Account (the “Escrow Funds”). The Borrower may, at any time, request a Subsequent Draw for all or a portion of the Escrow Funds. The Borrower issued a Promissory Note to the lender in the amount of the lender’s Initial Loan Advance. The principal balance of the Initial Loan Advance and each Subsequent Draw shall bear interest thereon from the Closing Date and applicable Advance Date, respectively, at 15.00% per annum. The Borrower shall pay the lender, according to its Applicable Percentage, an Unused Commitment Fee on the actual daily amount of the Unused Commitment Amount during the immediately preceding calendar quarter at the rate of five percent (5.00%) per annum. In the event any payment is not paid on or within five (5) Business Days of the scheduled payment date, an amount equal to two percent (2.00%) of the past due amount shall be payable on demand, in addition to interest accruing. In addition, upon the occurrence and during the continuation of an Event of Default hereunder, the Initial Loan Advance and all Subsequent Draws, including principal, interest, compounded interest, and professional fees thereupon, shall upon the election of the lender, bear interest at the Interest Rate, plus five (5) percentage points. In the event any interest is not paid when due hereunder, delinquent interest shall be added to principal and shall bear interest on interest, compounded. As security for the prompt and complete payment when due (whether on the payment dates or otherwise) of all the Secured Obligations, Borrower granted to the lender a security interest in all of Borrower’s right, title, and interest in and to all Inventory or Equipment and machinery, in each case, purchased (or refinanced) with the proceeds of the Initial Loan Advance and any Subsequent Draw, and, to the extent not otherwise included, all Proceeds of each of the foregoing and all products, additions, increases and accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing. From October 12, 2023, through February 26, 2024, the Borrower entered into Lender Joinder Agreements (the “Joinder Agreement”) with several individuals and entities as subsequent lenders. Under the terms of the Joinder Agreement, the subsequent lenders agreed to become a lender and be bound by the terms of the Series B Agreement as a lender pursuant to the Series B Agreement. As of the date of this filing, $175,000 has been committed by the lender and subsequent lenders. 33
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Series C Financing On October 19, 2023, the Borrower entered into a Series C Loan and Security Agreement (the “Series C Agreement”) with an individual as lender. Under the terms of the Series C Agreement, the lender will make available to Borrower, in an amount not to exceed its Commitment, a Loan Advance amount to be determined by the lender (as such amount may be increased, the “Aggregate Commitment”) in the aggregate, of which (x) a certain amount will be deposited into an account of the Borrower in accordance with its written instructions (the “Initial Loan Advance”) and (y) the remaining balance of the Aggregate Commitment after deducting the Initial Loan Advance shall be deposited into the Escrow Account (the “Escrow Funds”). The Borrower may, at any time, request a Subsequent Draw for all or a portion of the Escrow Funds. The Borrower issued a Promissory Note to the lender in the amount of the lender’s Initial Loan Advance. The principal balance of the Initial Loan Advance and each Subsequent Draw shall bear interest thereon from the Closing Date and applicable Advance Date, respectively, at 18.00% per annum. The Borrower shall pay the Lender, according to its Applicable Percentage, an Unused Commitment Fee on the actual daily amount of the Unused Commitment Amount during the immediately preceding calendar quarter at the rate of five percent (5.00%) per annum. In the event any payment is not paid on or within five (5) Business Days of the scheduled payment date, an amount equal to two percent (2.00%) of the past due amount shall be payable on demand, in addition to interest accruing. In addition, upon the occurrence and during the continuation of an Event of Default hereunder, the Initial Loan Advance and all Subsequent Draws, including principal, interest, compounded interest, and professional fees thereupon, shall upon the election of the lender, bear interest at the Interest Rate, plus five (5) percentage points. In the event any interest is not paid when due hereunder, delinquent interest shall be added to principal and shall bear interest on interest, compounded. As security for the prompt and complete payment when due (whether on the payment dates or otherwise) of all the Secured Obligations, Borrower granted to the lender a security interest in all of Borrower’s right, title, and interest in and to all Inventory or Equipment and machinery, in each case, purchased (or refinanced) with the proceeds of the Initial Loan Advance and any Subsequent Draw, and, to the extent not otherwise included, all Proceeds of each of the foregoing and all products, additions, increases and accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing. As of the date of this filing, $7,225,000 has been committed by the lender. Series D Financing On March 15, 2024, the Borrower entered into the Series D Loan and Security Agreement (the “Series D Agreement”), with the lenders party thereto from to time for an amount of up to $5,000,000. In connection with the Series D Agreement, on March 15, 2024, Forever 8 also entered into a Subordination Agreement (the “Subordination Agreement”) with each of the lenders, the several individuals, financial institutions or entities from time to time party thereto (collectively, the “Senior Lenders”) and the collateral agent for the Senior Lenders. Forever 8 additionally entered into an Intercreditor Agreement (the “Intercreditor Agreement”) with the lenders party thereto and the collateral agent for such lenders. As of the date of this filing, a total of $0 has been committed by the lender. May 2023 Debt Exchange On May 30, 2023, the Borrower entered into a Debt Exchange Agreement (the “Debt Agreement”) with two Lenders for funds advanced to the Borrower pursuant to secured promissory notes (the “Old Notes”), executed by the Borrower in favor of the Lenders during 2021. Under the terms of the Debt Agreement, the Old Notes were exchanged for new Notes (“New Notes”) as per the terms of the Loan and Security Agreement dated May 30, 2023. The principal of the New Notes issued under the Debt Agreement is $1,650,000. March 2023 Offering On March 15, 2023, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Hudson Bay Master Fund Ltd. (“Hudson Bay”) for the issuance and sale of a Senior Secured Convertible Note with an initial principal amount of $5,555,000 (the “Hudson Note”) at a conversion price of $6.245 per share of the Company’s common stock, and a warrant (the “Hudson Warrant”) to purchase up to 889,512 shares of Common Stock with an initial exercise price of $6.245 per share of Common Stock (the “Private Placement”). The purchase price of the Hudson Note and the Hudson Warrant is $5 million. The entire outstanding principal balance on the Hudson Note and any outstanding fees or interest was due and payable in full on January 15, 2024 (“Maturity Date”). The Hudson Note did not bear interest, provided, however, that the Hudson Note would bear interest at 18% per annum upon the occurrence of an event of default. The Hudson Note was paid in full on February 26, 2024. Additionally, the Company redeemed all of the Hudson Warrants for $660,000 on October 23, 2023. Palladium Capital Group, LLC acted as placement agent for the Private Placement. For the acting as placement agent in the Private Placement, the Placement Agent received (i) cash compensation of $400,000 (8% of the gross proceeds to the Company) and (ii) a warrant to purchase up to 71,161 shares of Common Stock (8% of the shares of Common Stock underlying the Hudson Note). The Company repaid the full amount under the Hudson Note and redeemed the Hudson Warrant in 2024. See “Note 16 – Convertible Note Payable” in the accompanying financial statements for further information.
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Critical Accounting Policies and Significant Judgments and Estimates There have been no changes to our critical accounting policies during the nine months ended September 30, 2023. Critical accounting policies and the significant accounting estimates made in accordance with such policies are regularly discussed with the Audit Committee of the Company’s board of directors. Those policies are discussed under “Critical Accounting Policies” in our “Management’s Discussion and Analysis of the Financial Condition and Results of Operations” included in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, as well as in our consolidated financial statements and the footnotes thereto, included in the Annual Report on Form 10-K. Key Components of our Results of Operations Revenues We generate the majority of our revenues from inventory financing through our wholly owned subsidiary, Forever 8. In addition, we will generate revenues from the sale of corrugated custom packaging to a wide array of customers. Cost of Revenues Our cost of revenues includes inventory costs, materials and supplies costs, internal labor costs and related benefits, subcontractor costs, depreciation, overhead and shipping and handling costs. In addition, we will incur costs to purchase Bitcoin mining equipment which will be resold to customers and costs from the development of Web3 products and services. Selling, General and Administrative Expenses Selling, general and administrative expenses consist of selling, marketing, advertising, payroll, administrative, finance and professional expenses. Restructuring and Severance Expenses Restructuring and severance expenses consist of costs associated with organizational changes, including employee severance payments, benefits continuation, contract terminations, asset impairments, and other expenses related to restructuring initiatives. Interest Expense and Income, Net Interest expense includes the cost of our borrowings under our debt arrangements. Interest income includes the interest earned under our notes receivable. Gain on Forgiveness of Earnout Gain on forgiveness of earnout includes the gain recognized related to the forfeiture of the earnout rights by the Sellers of Forever 8. Other Income Other income includes the interest income received the Wattum Note. 35
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Results of Operations Three Months Ended March 31, 2025 versus Three Months Ended March 31, 2024 Continuing Operations The following table sets forth information comparing the components of net (loss) income from continuing operations for the three months ended March 31, 2025 and 2024: Three Months Ended March 31, Period over Period Change 2024 2023 $ % Revenues, net $ 9,913,987 $ 7,958,697 $ 1,955,290 24.57% Cost of revenues 9,100,728 6,569,687 2,531,041 38.53% Gross profit 813,259 1,389,010 (575,751) -41.45% Operating expenses: Selling, general and administrative 2,229,425 3,127,943 (898,518) -28.73% Restructuring and severance - 1,414,838 (1,414,838) -100.00% Operating loss (1,416,166) (3,153,771) 1,737,605 -55.10% Other (expense) income: Interest income (expense) (1,288,804) (1,198,771) (90,033) 7.51% Loss on issuance of warrants - - - 0.00% Gain on forgiveness of earnout - 6,100,000 (6,100,000) -100.00% Other income 21,898 26,677 (4,779) -17.91% Total other income (expense), net (1,266,906) 4,927,906 (6,194,812) -125.71% Income (loss) before income taxes (2,683,072) 1,774,135 (4,457,207) -251.23% Income tax expense (benefit) (28,793) - (28,793) -100.00% Net income (loss) $ (2,654,279) $ 1,774,135 $ (4,428,414) $ -249.61% Revenue For the three months ended March 31, 2025, revenues increased by $1,955,290 or 24.57%, as compared to the three months ended March 31, 2024. The increase was attributable to the increased sale of goods from revenue derived from the inventory management solutions business due to the Company’s additional access to capital versus the reduction in capital in 2024 due to the repayment of its outstanding convertible notes payable. Cost of Revenues For the three months ended March 31, 2025, cost of revenues increased by $2,531,041 or 38.53%, as compared to the three months ended March 31, 2024. The increase was largely attributable to the increase in total revenues for our inventory management solutions business as well as the mix of products sold being lower margin. Gross Profit For the three months ended March 31, 2025, gross profit decreased by $575,751 or 41.45%, as compared to the three months ended March 31, 2024. The decrease was largely attributable to lower margin product sales in the inventory management solutions business. Operating Expenses Selling, general and administrative expenses were $2,229,425 and $3,127,943 for the three months ended March 31, 2025 and 2024, respectively, representing a decrease of $898,518, or 28.73%. The decrease was largely attributable to the decrease in professional fees, payroll costs, insurance expense, and rent expense. Restructuring and severance were $0 and $1,414,838 for the three months ended March 31, 2025 and 2024, respectively, representing a decrease of $1,414,838, or 100.00%. The decrease was largely attributable to the completion of the restructuring plan. Interest Expense Interest expense was $1,288,803, for the three months ended March 31, 2025, versus $1,198,771 for the three months ended March 31, 2024. The increase in interest expense was largely attributable to the additional borrowings under the lines of credit.
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Gain on forgiveness of earnout Gain on forgiveness of earnout was $0 for the three months ended March 31, 2025 versus $6,100,000 for the three months ended March 31, 2024. The full amount of the earnout rights were forgiven in 2024. Income tax expense Income tax (benefit) expense was $(28,793) and $0 for the three months ended March 31, 2025 and 2024, respectively. The benefit relates to foreign income tax credits earned. Net income (loss) Net income (loss) was $(2,654,279) for the three months ended March 31, 2025, versus $1,774,135 for the three months ended March 31, 2024. The decrease in net income was largely attributable the Company’s prior recognition of the gain on forgiveness of earnout. 36
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Discontinued Operations On November 22, 2024, the Company entered into an Asset Purchase Agreement to sell substantially all of the assets of Ferguson Containers, Inc., the Company’s Corrugated Packaging Business. As a result of this agreement, Ferguson Containers has been classified as a discontinued operation for all periods presented in the consolidated financial statements. Revenue and operating results from Ferguson Containers are excluded from continuing operations and presented as a single line item in the consolidated statements of operations. Ferguson Containers generated revenues of $6.8 million and $7.7 million and operating income of $0.4 million and $0.7 million for the years ended December 31, 2024 and 2023, respectively. The Company closed on the transaction on April 7, 2025. The following table sets forth information comparing the components of net (loss) income from discontinued operations for the three months ended March 31, 2025 and 2024: Three Months Ended March 31, Period over Period Change 2025 2024 $ % Revenues, net: Corrugated $ 1,773,929 $ 1,661,123 $ 112,806 6.79% Cost of revenues: Corrugated 1,276,685 1,164,371 112,314 9.65% Gross profit: Corrugated 497,244 496,752 492 0.10% Operating expenses: Selling, general and administrative 393,013 334,016 58,997 17.66% Restructuring and severance - - - 0.00% Operating loss 104,231 162,736 (58,505) -35.95% Other income: Other income 1,322 4,092 (2,770) -67.72% Total other income, net 1,322 4,092 (2,770) -67.72% Income before income taxes 105,553 166,828 (61,275) -36.73% Income tax expense (benefit) - - - 0.00% Net income from discontinued operations $ 105,553 $ 166,828 $ (61,275) -36.73% Revenue For the three months ended March 31, 2025, revenues totaled $1,773,929, an increase of $112,806, or 6.79%, compared to $1,661,123 for the three months ended March 31, 2024. The increase was primarily due to higher order volume from customers. Cost of Revenues Cost of revenues was $1,276,685 for the three months ended March 31, 2025, compared to $1,164,371 for the same period in 2024, representing an increase of $112,314, or 9.65%. The increase was primarily driven by a shift in product mix toward lower-margin corrugated materials. Gross Profit Gross profit was relatively flat at $497,244 for the three months ended March 31, 2025, compared to $496,752 in the prior-year period, reflecting a nominal increase of $492, or 0.10%. The stability in gross profit reflects the offsetting impact of higher revenues and increased cost of revenues tied to lower-margin product sales. Operating Expenses Selling, general and administrative expenses were $393,013 for the three months ended March 31, 2025, compared to $334,016 for the three months ended March 31, 2024, representing an increase of $58,997, or 17.66%. The increase was primarily due to higher payroll- related costs and a $23,013 bad debt charge recorded during the current period. There were no restructuring or severance expenses in either period.
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Net income Net income was $105,553 for the three months ended March 31, 2025, compared to $166,828 for the same period in 2024, a decrease of $61,275, or 36.73%. The decline was primarily driven by increased operating expenses. Liquidity and Capital Resources As reflected in the accompany financial statements for the three months ended March 31, 2025, the Company had net loss of $2.5 million and as of March 31, 2025, had stockholders’ equity of $9.3 million and approximately $0.4 million in cash and cash equivalents as compared to $0.2 million at December 31, 2024. The Company expects that its current cash and cash equivalents are not sufficient to support its projected operating requirements for at least the next 12 months from this date. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. 37
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The Company expects to need additional capital in order to maintain revenues at current levels. Any additional equity financing, if available, may not be on favorable terms and would likely be significantly dilutive to the Company’s current stockholders, and debt financing, if available, may involve restrictive covenants. The Company’s ability to access capital when needed is not assured and, if not achieved on a timely basis, will likely have a materially adverse effect on our business, financial condition and results of operations. Cash Flows Since inception, Eightco and its subsidiaries have primarily used its available cash to fund its operations. The following table sets forth a summary of cash flows for the periods presented: For the Three Months Ended March 31, 2024 2023 Cash (used in) provided by: Operating Activities $ 999,824 $ (723,292) Investing Activities (44,647) - Financing Activities (759,937) (3,715,767) Net increase (decrease) in cash and restricted cash $ 195,240 $ (4,439,059) Cash Flows for the Three Months Ended March 31, 2025 and 2024 Operating Activities Net cash provided by operating activities was 999,824 during the three months ended March 31, 2025, which consisted primarily of a net loss of $2,548,725, offset by depreciation and amortization of $612,664, amortization of debt issuance costs of $250,000 and changes in assets and liabilities of $2,685,885. Net cash used in operating activities was $723,376 during the three months ended March 31, 2025, which consisted primarily of net income of $4,947,859, depreciation and amortization of $605,796, amortization of debt issuance costs of $587,750 and changes in assets and liabilities of ($798,719) offset largely by a gain on forgiveness of earnout of $6,100,000. Investing Activities Net cash provided by investing activities was $44,647 during the three months ended March 31, 2025 compared to $0 for the three months ended March 31, 2024. The increase in net cash provided by investing activities is largely attributable to purchases of long-lived assets. Financing Activities Net cash used in financing activities was $759,937 during the three months ended March 31, 2025 compared to $($3,715,767) for the three months ended March 31, 2024. This decrease was largely attributable to less repayments of debt instruments most notably the convertible notes payable in the amount of $4,915,000 paid in 2024. The Company did not have any off-balance sheet arrangements as of March 31, 2025. Known Trends, Events, Uncertainties and Factors That May Affect Future Operations The impact of general economic conditions, actual and projected, including inflation, rising interest rates, lower consumer confidence, volatile capital markets, supply chain disruptions, uncertainty and volatility in the financial services sector and the impact of the Hamas- Israel and Russia-Ukraine conflicts, and government and business responses thereto, on the global economy and regional economies. Contractual Obligations and Commitments The Company has no debt covenants that require certain financial information to be met. Critical Accounting Policies and Significant Judgments and Estimates This discussion and analysis of the Company’s financial condition and results of operations is based on the Company’s combined financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. In accordance with U.S. GAAP, the Company bases its estimates on historical experience and on various other assumptions the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
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For information on the Company’s significant accounting policies please refer to Note 2 to the Company’s Financial Statements included in this Quarterly Report. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. ITEM 4. CONTROLS AND PROCEDURES Disclosure Controls and Procedures The Company’s management, with the participation of the Company’s Principal Executive Officer and Principal Financial and Accounting Officer has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on such evaluation, the Company’s Principal Executive Officer and Principal Financial and Accounting Officer have concluded that, as of the end of such period covered by this Quarterly Report, the Company’s disclosure controls and procedures were not effective to provide reasonable assurance that information that it is required to disclose in reports that the Company files with the SEC is recorded, processed, summarized and reported within the time periods specified by the Exchange Act rules and regulations due to the reasons set forth below. As of December 31, 2024, management identified the following material weakness in our internal control over financial reporting: the Company was unable to provide a timely financial reporting package in connection with the year end audit. This was primarily the result of the Company’s limited accounting personnel. This also limits the extent to which the Company can segregate incompatible duties and has a lack of controls in place to ensure that all material transactions and developments impacting the financial statements are reflected. There is a risk under the current circumstances that intentional or unintentional errors could occur and not be detected. Management has concluded that the material weakness described above currently exists as of March 31, 2025. The Company plans to engage with outside consultants to strengthen its capabilities and help the Company in the design and assessment of its internal controls over financial reporting to further reduce and remediate existing control deficiencies during 2025. Changes in Internal Control over Financial Reporting During the three months ended March 31, 2025, there were no changes in our internal control over financial reporting that materially affected our internal control over financial reporting as of March 31, 2025. 39
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PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS From time to time, the Company is party to legal actions that are routine and incidental to its business. However, based upon available information and in consultation with legal counsel, management does not expect the ultimate disposition of any or a combination of these actions to have a material adverse effect on the Company’s assets, business, cash flow, condition (financial or otherwise), liquidity, prospects and\or results of operations. ITEM 1A. RISK FACTORS Our business and common stock are subject to a number of risks and uncertainties. The discussion of such risks and uncertainties may be found under “Risk Factors” in the Company’s annual report on Form 10-K filed with the SEC on April 15, 2025. There have been no material changes to these risks during the three months ended March 31, 2025. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES Recent Sales of Unregistered Securities; Uses of Proceeds from Registered Securities On January 21, 2025, the Company issued 485,381 shares of common stock value at $713,511 to satisfy accrued interest to debt holders. On March 31, 2025, the Company issued 80,000 shares of common stock valued at $143,201 to a consultant for services performed related to investor relations. The issuances were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. ITEM 5. OTHER INFORMATION During the three months ended March 31, 2025, no director or officer adopted or terminated any (i) “Rule 10b5-1 trading arrangement,” as defined in Item 408(a) of Regulation S-K intending to satisfy the affirmative defense conditions of Rule 10b5–1(c) or (ii) “non-Rule 10b5- 1 trading arrangement,” as defined in Item 408(a) of Regulation S-K. 40
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ITEM 6. EXHIBITS (b) Exhibits The following documents are filed as exhibits hereto: Exhibit No. Description 31.1* Certification of the Chief Executive Officer of the Company, pursuant to the Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of the Chief Financial Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1** Certification of the Chief Executive Officer and Chief Financial Officer of the Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS* Inline XBRL Instance Document – the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH* Inline XBRL Taxonomy Extension Schema Document. 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101), * Filed herewith. ** Furnished herewith. 41
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SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: May 15, 2025 EIGHTCO HOLDINGS INC. By: /s/ Paul Vassilakos Name:Paul Vassilakos Title: Chief Executive Officer EIGHTCO HOLDINGS INC. By: /s/ Brett Vroman Name:Brett Vroman Title: Chief Financial Officer 42
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EXHIBIT 31.1 EIGHTCO HOLDINGS INC. CERTIFICATION PURSUANT TO RULE 13a-14 OR 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Paul Vassilakos, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Eightco Holdings Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: May 15, 2025 /s/ Paul Vassilakos Paul Vassilakos Chief Executive Officer (Principal Executive Officer)
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EXHIBIT 31.2 EIGHTCO HOLDINGS INC. CERTIFICATION PURSUANT TO RULE 13a-14 OR 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Brett Vroman, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Eightco Holdings Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: May 15, 2025 /s/ Brett Vroman Brett Vroman Chief Financial Officer (Principal Financial Officer)
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EXHIBIT 32.1 EIGHTCO HOLDINGS INC. CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the quarterly report on Form 10-Q for the quarter ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), of Eightco Holdings Inc. (the “Company”), each of the undersigned officers of the Company hereby certify, in their capacity as an executive officer of the Company, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of their knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: May 15, 2025 /s/ Paul Vassilakos Paul Vassilakos Chief Executive Officer (Principal Executive Officer) Date: May 15, 2025 /s/ Brett Vroman Brett Vroman Chief Financial Officer (Principal Financial Officer)