ACQUISITIONS AND DIVESTITURES

3 Months Ended

Mar. 31, 2025

Acquisitions And Divestitures

ACQUISITIONS AND DIVESTITURES

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.

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:
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.

EIGHTCO HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)