SEGMENTING REPORTING

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

SEGMENTING REPORTING

21. 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 and six months ended June 30, 2024 were the Inventory Management Solutions segment and the Corrugated segment. 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 June 30, 2024 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.

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. 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 manages certain operating expenses separately at the corporate level and does not allocate such expenses to the segments. Segment income from operations excludes interest income/expense and other income or expenses and income taxes according to how a particular reportable segment’s management is measured. Management does not consider impairment charges, and unallocated costs in measuring the performance of the reportable segments.

Segment information available with respect to these reportable business segments for the three and six months ended June 30, 2024 and 2023 was as follows:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2024			2023			2024			2023
Revenues:
Inventory Management Solutions	$	5,283,593		$	18,864,903		$	13,242,290		$	32,813,244
Corrugated		1,661,123			1,682,250			3,394,543			3,623,624
Total segment and consolidated revenues	$	7,017,013		$	20,547,153		$	16,636,833		$	36,436,868
Cost of revenues:
Inventory Management Solutions	$	3,959,810		$	16,824,061		$	10,529,497		$	29,458,650
Corrugated		1,279,392			1,193,198			2,443,763			2,629,232
Total segment and consolidated cost of revenues	$	5,239,202		$	18,017,259		$	12,973,260		$	32,087,882
Gross profit:
Inventory Management Solutions	$	1,323,783		$	2,040,842		$	2,712,793		$	3,354,594
Corrugated		454,028			489,052			950,780			994,392
Total segment and consolidated gross profit	$	1,777,811		$	2,529,894		$	3,663,573		$	4,348,986
Income (loss) from operations:
Inventory Management Solutions	$	(834,958	)	$	(525,530	)	$	(1,629,011	)	$	(1,017,764	)
Corrugated		114,755			99,737			277,491			245,319
Corporate		(963,207	)		(2,338,303	)		(3,322,925	)		(5,521,990	)
Total segment and consolidated loss from operations	$	(1,683,410	)	$	(2,764,096	)	$	(4,674,445	)	$	(6,294,435	)
Depreciation and amortization:
Inventory Management Solutions	$	662,597		$	584,166		$	1,218,896		$	1,160,746
Corrugated		37,992			49,496			87,489			98,993
Total segment and consolidated depreciation and amortization	$	700,589		$	633,662		$	1,306,385		$	1,259,739
Revenues by geography:
North America	$	3,555,050		$	3,772,968		$	6,668,172		$	7,060,372
Europe		3,661,963			16,774,185			9,968,661			29,376,496
Total geography and consolidated revenues	$	7,017,013		$	20,547,153		$	16,636,833		$	36,436,868
Segment capital expenditures:
Inventory Management Solutions	$	-		$	-		$	-		$	-
Corrugated		4,847			77,720			4,847			114,028
Corporate		944			-			944			-
Total segment and consolidated capital expenditures	$	5,791		$	77,720		$	5,791		$	114,028
Segment total assets:
Inventory Management Solutions	$	43,865,557		$	52,160,446		$	43,865,557		$	52,160,446
Corrugated		1,908,065			2,595,471			1,908,065			2,595,471
Corporate		2,592,063			5,664,698			2,592,063			5,664,698
Total segment and consolidated assets	$	48,365,685		$	60,420,615		$	48,365,685		$	60,420,615

EIGHTCO HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)