Eightco Holdings Inc. SEC 10-K Report

Eightco Holdings Inc., a company specializing in inventory cash flow solutions and custom packaging, has released its annual 10-K report. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces in the competitive market landscape.

Financial Highlights

Revenues, net: $39.62 million, a decrease of 41.36% compared to the previous year, primarily due to less capital utilized to purchase inventory for customers.

Gross profit: $5.98 million, a decrease of 4.44% compared to the previous year, largely attributable to the decrease in revenues.

Operating loss: $8.19 million, an improvement of 23.29% from the previous year, reflecting reduced selling, general, and administrative expenses.

Net income (loss) from continuing operations: $0.29 million, a significant improvement from a net loss of $69.06 million in the previous year, largely due to no further charges for the loss on issuance of warrants and amortized interest expense under the convertible notes payable.

Net income (loss) per share – basic: $0.40, compared to a loss of $23.63 per share in the previous year, reflecting the overall improvement in net income.

Net income (loss) per share – diluted: $0.36, compared to a loss of $23.63 per share in the previous year, indicating the impact of potential dilutive securities.

Business Highlights

Business Overview: Eightco Holdings Inc. operates primarily through two main businesses: Forever 8's Inventory Cash Flow Solution and the Corrugated Packaging Business. The company focuses on purchasing inventory for e-commerce retailers and manufacturing custom packaging to enhance brand awareness.

Acquisition of Forever 8: On October 1, 2022, Eightco completed the acquisition of Forever 8 Fund, LLC, which provides funding solutions for e-commerce businesses. This acquisition has shifted the company's focus towards inventory cash flow solutions.

Corrugated Packaging Business: Ferguson Containers, part of Eightco, manufactures and sells custom packaging. The business emphasizes quick production cycles and uses 100% post-consumer recycled materials for many products.

Asset Sale Agreement: On November 22, 2024, Eightco entered into an Asset Purchase Agreement to sell certain assets of Ferguson Containers, which is expected to close in the second quarter of 2025. This move aligns with the strategic focus on scaling Forever 8.

Revenue Segments: The company has identified two reportable operating segments: Inventory Management Solutions and Corrugated Packaging. Forever 8's Inventory Management Solutions generated significant revenue, while the Corrugated Packaging Business also contributed to the company's revenue streams.

Future Outlook: Eightco plans to drive revenue growth primarily through Forever 8 by expanding its market reach and focusing on organic growth. The company aims to maintain close partnerships with customers to adapt to changing demands effectively.

Competition: Eightco faces competition in both its inventory solutions and packaging businesses. Key competitors include Clearco and Payoneer for Forever 8, and Sutherland Packaging and Acme Corrugated Box Company for the Corrugated Packaging Business.

Human Capital Resources: As of March 31, 2025, Eightco employed 23 people, with a focus on creating a diverse and inclusive work environment. The company values integrity, caring, and inclusivity as core values.

Supply Chain and Production: The Corrugated Packaging Business relies on independent suppliers for corrugated cardboard, with main suppliers including Corrugated Supplies Company and Georgia Pacific. The company strives to develop relationships with multiple suppliers to ensure a steady supply of materials.

Strategic Initiatives

Strategic Initiatives: Eightco Holdings Inc. has focused on strategic initiatives such as the acquisition of Forever 8 to enhance its inventory management solutions. The company has also entered into several financing agreements, including Series A, B, C, and D financings, to support its operational and strategic initiatives. These financings are aimed at providing liquidity and supporting the company's growth in inventory purchasing for e-commerce retailers.

Capital Management: The company engaged in multiple capital management activities, including a private placement in February 2024, raising approximately $0.71 million. It also executed a series of debt exchanges and amendments to restructure obligations related to the Forever 8 acquisition, resulting in significant forgiveness and conversion of accrued interest and principal. Additionally, Eightco Holdings Inc. declared a dividend of Series A Preferred Stock and completed reverse stock splits to manage its capital structure effectively.

Future Outlook: Looking ahead, Eightco Holdings Inc. plans to continue accessing capital through debt financing and equity offerings to support ongoing operations and scale revenues. The company expects to close the sale of its Corrugated Packaging Business in the second quarter of 2025, which will provide additional liquidity. Management is focused on reducing costs and raising additional capital as needed to ensure sustainable growth and operational efficiency.

Challenges and Risks

Challenges and Risks: Eightco Holdings Inc. faces significant challenges due to its recent formation and limited track record. The business strategy focuses on expanding Forever 8's market reach, but the company must navigate competitive pressures from established players like Clearco and Payoneer. Additionally, the Corrugated Packaging Business is subject to competition from companies such as Sutherland Packaging and Acme Corrugated Box Company. The company relies on a few suppliers for raw materials, which poses a risk if supply disruptions occur.

Financial Risks: The company has limited financial resources, and auditors have expressed doubt about its ability to continue as a going concern. This uncertainty could affect its ability to secure additional financing.

Operational Risks: The loss of key management personnel, competition in highly competitive industries, and the need for significant capital investments pose operational challenges. The company also faces risks related to cybersecurity and data integrity, which could damage its reputation and disrupt operations.

Market Risks: Economic conditions, such as inflation and potential recessions, could adversely affect consumer spending and the company's financial performance. Geopolitical risks, including conflicts like Russia's invasion of Ukraine, could impact global economic stability.

Regulatory Risks: Compliance with evolving regulations, particularly in data protection and privacy, could increase operational costs and affect marketing capabilities.

Securities Risks: The company does not expect to issue dividends, and there is a risk of its common stock being delisted from Nasdaq if listing requirements are not met. The issuance of preferred stock could dilute existing shareholders' ownership.

Management’s Discussion and Analysis: Management acknowledges the challenges posed by the company's limited financial resources and the competitive landscape. The company plans to focus on organic growth and strategic acquisitions to drive revenue. However, the need for additional liquidity and capital resources remains a concern. The company is also addressing the risks associated with its recent acquisition of Forever 8, including the integration of operations and achieving expected benefits.

Quantitative and Qualitative Disclosures About Market Risk: The company is exposed to market risks, including fluctuations in foreign currency exchange rates, which could impact its financial results. The reliance on a limited number of suppliers for raw materials in the Corrugated Packaging Business also presents a risk of supply chain disruptions, which could affect production and profitability.

SEC Filing: Eightco Holdings Inc. [ OCTO ] - 10-K - Apr. 15, 2025