Eightco Holdings Inc

Previous wording

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 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.

Current wording

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 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”) and no party has any further obligation or liability thereunder except as related to any obligations that survive the 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.

Previous wording

Pursuant to the McFadden Severance Agreement, as of the Separation Date, the amended and restated employment agreement, by and between the Company and Mr. McFadden, effective as of September 27, 2022 (the “McFadden 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 (the “Restrictive Covenants Agreement”), attached to the McFadden Employment Agreement. Notwithstanding the foregoing, the Company has agreed to waive certain post-termination obligations as related to certain non-competition and non-compete provisions in the Restrictive Covenants Agreement.

Current wording

Pursuant to the McFadden Severance Agreement, as of the Separation Date, the amended and restated employment agreement, by and between the Company and Mr. McFadden, effective as of September 27, 2022 (the “McFadden Employment Agreement”), terminated and no party has 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 (the “Restrictive Covenants Agreement”), attached to the McFadden Employment Agreement. Notwithstanding the foregoing, the Company has agreed to waive certain post-termination obligations as related to certain non-competition and non-compete provisions in the Restrictive Covenants Agreement.

Previous wording

Pursuant to the McFadden Severance Agreement, for a period of 8 weeks following the Separation Date, Mr. McFadden has agreed to reasonably cooperate with the Company in the transition of positions. Additionally, Mr. McFadden shall remain a director of the Company’s board of directors (the “Board”) under the standard terms, conditions, and bylaws of the Company from the Separation Date through March 31, 2024, at which time Mr. McFadden shall resign from the Board. The McFadden Severance Agreement also provides for a mutual waiver and release of any claims in connection with Mr. McFadden’s employment, separation and departure from the Company, and for certain customary covenants regarding confidentiality.

Current wording

Pursuant to the McFadden Severance Agreement, for a period of 8 weeks following the Separation Date, Mr. McFadden agreed to reasonably cooperate with the Company in the transition of positions. Additionally, Mr. McFadden remained a director of the Company’s board of directors (the “Board”) under the standard terms, conditions, and bylaws of the Company from the Separation Date through March 31, 2024, at which time Mr. McFadden resigned from the Board. The McFadden Severance Agreement also provides for a mutual waiver and release of any claims in connection with Mr. McFadden’s employment, separation and departure from the Company, and for certain customary covenants regarding confidentiality.

Previous wording

As of the date of this filing, a total of 866,856 shares have been sold under the Agreement.

Current wording

As of the date of this filing, a total of 150,019 shares have been sold under the ATM Agreement.

Previous wording

On May 30, 2023, the Company’s wholly owned subsidiary, Forever 8 (the “Borrower”), entered into a Loan and Security Agreement (the “Agreement”) with several individuals, financial institutions and entities (collectively, the “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”).

Current wording

On May 30, 2023, Forever 8 (the “Borrower”), entered into a Loan and Security Agreement (the “Agreement”) with several individuals, financial institutions and entities (collectively, the “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”).

Previous wording

For the three months ended March 31, 2024, revenues decreased by $6,269,895 or 39.46%, as compared to the three months ended March 31, 2023. The decrease was largely attributable to the decreased sale of goods from revenue derived from the inventory management solutions business due to the Company’s utilization of capital to repay its outstanding convertible notes payable.

Current wording

For the three months ended June 30, 2024, revenues decreased by $13,530,140 or 65.85%, as compared to the three months ended June 30, 2023. The decrease was largely attributable to the decreased sale of goods from revenue derived from the inventory management solutions business due to the Company’s utilization of capital to repay its outstanding convertible notes payable.

Previous wording

For the three months ended March 31, 2024, cost of revenues decreased by $6,336,565 or 45.03%, as compared to the three months ended March 31, 2023. The decrease was largely attributable to the decrease in total revenues for our inventory management solutions business.

Current wording

For the three months ended June 30, 2024, cost of revenues decreased by $12,778,057 or 70.92%, as compared to the three months ended June 30, 2023. The decrease was largely attributable to the decrease in total revenues for our inventory management solutions business.

Previous wording

For the three months ended March 31, 2024, gross profit increased by $66,670 or 3.67%, as compared to the three months ended March 31, 2023. The increase was largely attributable to a decrease in lower margin sales in the inventory management solutions business.

Current wording

For the three months ended June 30, 2024, gross profit decreased by $752,083 or 29.73%, as compared to the three months ended June 30, 2023. The decrease was largely attributable to a decrease in lower margin sales in the inventory management solutions business.

Previous wording

Selling, general and administrative expenses were $3,461,959 and $5,349,431 for the three months ended March 31, 2024 and 2023, respectively, representing a decrease of $1,887,472, or 35.28%. The decrease was largely attributable to the decrease in professional fees, payroll costs, insurance expense, and rent expense.

Current wording

Selling, general and administrative expenses were $3,461,221 and $4,717,556 for the three months ended June 30, 2024 and 2023, respectively, representing a decrease of $1,256,335, or 26.63%. The decrease was largely attributable to the decrease in professional fees, payroll costs, insurance expense and rent expense.

Previous wording

Interest expense was $1,198,771, for the three months ended March 31, 2024, versus $2,813,227 for the three months ended March 31, 2023. The decrease in interest expense was largely attributable to the reduced borrowings under the convertible notes payable.

Current wording

Interest expense was $1,323,594, for the three months ended June 30, 2024, versus $2,736,333 for the three months ended June 30, 2023. The decrease in interest expense was largely attributable to the repayment of convertible notes.

Previous wording

Gain on forgiveness of interest was $3,006,896, for the three months ended March 31, 2024, versus $0 for the three months ended March 31, 2023. The increase in gain on forgiveness of interest was attributable to forgiveness of accrued interest by the Sellers of Forever 8.

Current wording

Gain on extinguishment of liabilities was $7,427,193, for the three months ended June 30, 2024, versus $0 for the three months ended June 30, 2023. The increase in gain on extinguishment of liabilities was attributable to the reduction in liability due to its former parent under the terms of the Vinco Amendment and Lease Amendment dated June 20, 2024.

Previous wording

Net income (loss) was $4,947,859 for the three months ended March 31, 2024, versus ($49,851,140) for the three months ended March 31, 2023. The increase in net income was largely attributable the Company’s other income in the amount of $7,938,894.

Current wording

Net income was $4,448,892 for the three months ended June 30, 2024, versus a net loss of ($8,853,248) for the three months ended June 30, 2023. The increase in net income was largely attributable the Company’s other income in the amount of $6,132,302.

Previous wording

Gain on forgiveness of earnout was $6,100,000 for the three months ended March 31, 2024 versus $0 for the three months ended March 31, 2023. The increase in change in fair value of earnout was related to the forfeiture of the earnout shares by the sellers of Forever 8.

Current wording

Gain on forgiveness of earnout was $6,100,000 for the six months ended June 30, 2024 versus $0 for the six months ended June 30, 2023. The increase in change in fair value of earnout was related to the forfeiture of the earnout shares by the sellers of Forever 8.

Previous wording

As reflected in the accompany financial statements for the three months ended March 31, 2024, the Company had net income of $4.9 million and as of March 31, 2024, had stockholders’ equity of $3.5 million and approximately $0.8 million in cash and cash equivalents as compared to $5.2 million at December 31, 2023. 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.

Current wording

As reflected in the accompany financial statements for the six months ended June 30, 2024, the Company had net income of $6.4 million and as of June 30, 2024, had stockholders’ equity of $13.4 million and approximately $0.3 million in cash and cash equivalents as compared to $5.2 million at December 31, 2023. 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.

Previous wording

Cash Flows for the Three Months Ended March 31, 2024 and 2023

Current wording

Cash Flows for the Six Months Ended June 30, 2024 and 2023

Previous wording

Net cash (used in) operating activities was ($723,376) during the three months ended March 31, 2024, 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 interest of $3,006,896 and a gain on forgiveness of earnout of $6,100,000.

Current wording

Net cash (used in) operating activities was ($1,163,566) during the six months ended June 30, 2024, which consisted primarily of net income of $6,389,855, depreciation and amortization of $1,218,430, amortization of debt issuance costs of $837,750, and changes in assets and liabilities of $3,566,551 offset largely by gain on extinguishment of liabilities of $7,427,193 and gain on forgiveness of earnout of $6,100,000. Net cash (used in) operating activities was ($5,672,358) during the six months ended June 30, 2023, which consisted primarily of a net loss of $58,704,388 offset largely by amortization of debt issuance costs of $3,992,457 and loss on issuance of warrants of $46,928,815 and changes in assets and liabilities of ($244,981).

Previous wording

Net cash provided by investing activities was $0 during the three months ended March 31, 2024 compared to $67,202 for the three months ended March 31, 2023. The decrease in net cash provided by investing activities is largely attributable to no purchases or sales of long-lived assets.

Current wording

Net cash (used in) investing activities was ($5,881) during the six months ended June 30, 2024 compared to ($92,278) for the six months ended June 30, 2023. The decrease in net cash used in investing activities is largely attributable to the decrease in purchases of property and equipment and licensing agreements during the six months ended June 30, 2024.

Previous wording

Net cash provided by (used in) financing activities was ($3,715,767) during the three months ended March 31, 2024 compared to $2,383,909 for the three months ended March 31, 2023. This decrease was largely attributable to proceeds the repayment of convertible notes payable in the amount of $4,915,000 offset by net borrowings under lines of credit of $575,000 and net proceeds from investors of $710,000.

Current wording

Net cash (used in) provided by financing activities was ($3,715,313) during the six months ended June 30, 2024 compared to $4,559,110 for the six months ended June 30, 2023. This increase of cash used in financing activities was largely attributable to proceeds used for the repayments of convertible notes payable of ($4,915,000) and decrease in borrowings from convertible notes payable in relation to the six months ended June 30, 2023.