OCTO Eightco Holdings Inc

Eightco Holdings Inc. (NASDAQ: OCTO) (the “Company” or “Eightco”) today announced financial results for the three months ended March 31, 2024.

Paul Vassilakos, CEO of Eightco and President of Forever 8 Fund, LLC (“Forever 8”), the Company’s largest subsidiary, said “The Company has a clear focus on prioritizing the Forever 8 business providing inventory capital for e-commerce sellers and refurbished apple product sellers. We have a proven model with significant customer demand for rapid expansion. That said, we also had a restrictive convertible note that constrained our long-term growth and limited our ability to raise capital. The Company made a primary task to repay this note to ensure the future success of Eightco and did so, as announced on February 26, 2024.”

Mr. Vassilakos continued, “Repaying the convertible notes resulted in the elimination of an aggregate of 5,846,627 dilutive shares related to warrants and convertible securities that were cancelled in connection therewith, as well as several one-time accounting events. It also resulted in a reduction in capital available to fund inventory purchases (“capital base”) by $5.4mn. While the reduction in our capital base has had a negative impact on revenue, we have significantly improved our balance sheet and shareholders’ equity. We have also successfully reduced operating expenses, which were predominantly related to the Company’s legacy businesses. Our current core operations provide the infrastructure to significantly scale revenues with a relatively modest increase in expenses. I've witnessed substantial progress within Eightco and believe our accomplishments in this first quarter provide a strong foundation for our business to scale and succeed. The demand for our services underscores the value we bring to our clients and the market. As we emerge from this transformative period, I am confident in our ability to accelerate growth and drive sustained success for Eightco and our stakeholders."

Financial Highlights and Commentary

Repayment of the convertible note reduced the Company’s capital base by $5.4mn which resulted in a decrease in top line revenues. The focus on Forever 8 operations also allowed for a reduction in selling, general and administrative expenses of 35%, where the Company posted a $4.9 net income for the first quarter of 2024 versus a $49.9mn net loss in the first quarter of 2023, much of which was related to warrant expenses from the convertible note that has been repaid.

• First quarter 2024 net income of $4.9mn versus a net loss of $49.9mn in the prior year quarter
• First quarter 2024 revenues of $9.6mn versus $15.9mn in the prior year quarter, driven by reduction in capital available for cell phone sales after repayment of the convertible note
• First quarter 2024 gross profit of $1.9mn (or 3.7% increase) from $1.8mn in the prior year quarter
• First quarter 2024 gross profit margin of 19.6%, versus 11.4% in the prior year quarter
• First quarter 2024 SG&A of $3.5mn, down 35.3% from $5.3mn in the prior year quarter
• First quarter 2024 EBITDA of $3.7mn compared to a loss of $46.4mn in the prior year quarter
• First quarter 2024 Adjusted EBITDA of ($0.8)mn, from a loss of ($2.9)mn in the prior year quarter
• First quarter 2024 balance sheet improvements of over $10mn due to:
  • Cancellation of $3.0mn in interest
  • Conversion of $1.1mn of interest into 1.4mn shares of common stock, of which 87.6% went to the founding members of Forever 8
  • Cancellation of earnout consideration with a fair value of $6.1mn

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

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

Reconciliation of EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA are non-GAAP performance measures. Management believes EBITDA and Adjusted EBITDA, in addition to operating profit, net (loss) income and other GAAP measures, are useful to investors to evaluate the Company’s results because they exclude certain items that are not directly related to the Company’s core operating performance. Investors should recognize that EBITDA and Adjusted EBITDA might not be comparable to similarly-titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance prepared in accordance with GAAP.

Reconciliations of the non-GAAP measures used in this press release are included in the table below. Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non-GAAP measures. Items excluded to arrive at forward-looking non-GAAP measures may have a significant, and potentially unpredictable, impact on our future GAAP results.

A reconciliation of EBITDA and Adjusted EBITDA to the most directly comparable GAAP measure in accordance with SEC Regulation G as above.

About Eightco

Eightco (NASDAQ: OCTO) is committed to growth of its subsidiaries, made up of Forever 8, an inventory capital and management platform for e-commerce sellers, and Ferguson Containers, Inc., a provider of complete manufacturing and logistical solutions for product and packaging needs, through strategic management and investment. In addition, the Company is actively seeking new opportunities to add to its portfolio of technology solutions focused on the e-commerce ecosystem through strategic acquisitions. Through a combination of innovative strategies and focused execution, Eightco aims to create significant value and growth for its portfolio companies and stockholders.

For additional information, please visit www.8co.holdings

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this press release other than statements of historical fact could be deemed forward looking. Words such as “plans,” “expects,” “will,” “anticipates,” “continue,” “expand,” “advance,” “develop” “believes,” “guidance,” “target,” “may,” “remain,” “project,” “outlook,” “intend,” “estimate,” “could,” “should,” and other words and terms of similar meaning and expression are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements are based on management’s current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: Eightco’s ability to regain and maintain compliance with the Nasdaq’s continued listing requirements; unexpected costs, charges or expenses that reduce Eightco’s capital resources; Eightco’s inability to raise adequate capital to fund its business; Eightco’s inability to innovate and attract users for Eightco’s products; future legislation and rulemaking negatively impacting digital assets; and shifting public and governmental positions on digital asset mining activity. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. For a discussion of other risks and uncertainties, and other important factors, any of which could cause Eightco’s actual results to differ from those contained in forward-looking statements, see Eightco’s filings with the Securities and Exchange Commission (the “SEC”), including in its Annual Report on Form 10-K filed with the SEC on April 1, 2024. All information in this press release is as of the date of the release, and Eightco undertakes no duty to update this information or to publicly announce the results of any revisions to any of such statements to reflect future events or developments, except as required by law.

For further information, please contact:Investor Relationsinvestors@8co.holdings