ORBS

Business Context and Reporting Period

Company: Eightco Holdings Inc. (Nasdaq: ORBS)
Reporting Period: Quarter ended September 30, 2025 (Q3 2025)
Business Model: The Company has pivoted to a dual-pillar strategy. Its sole operating business is Forever 8, an inventory funding and purchasing service for e-commerce retailers. In September 2025, the Board adopted a Digital Asset Treasury (DAT) Strategy, deploying capital into digital assets (primarily Worldcoin, Ethereum, and stablecoins) as a long-term reserve. The Company divested its Corrugated Packaging Business in April 2025, which is now reported as discontinued operations.

Key Financial Metrics

Material Changes vs. Prior Period

• Strategic Pivot to Digital Assets: The Company raised approximately $270 million via a PIPE transaction and ATM offerings in Q3 2025. Proceeds were largely deployed to acquire $286.7 million in digital assets. This resulted in a $18.64 million unrealized loss on the change in fair value of digital assets for the quarter, a non-operating item that significantly impacted net income.
• Operating Performance: Forever 8 revenues decreased 12.5% QoQ to $5.30 million due to the exit of unprofitable liquidation-model operations. Gross profit turned negative ($0.20 million loss) due to inventory write-downs and receivable write-offs associated with this exit.
• Divestiture: The Corrugated Packaging Business was sold in April 2025, resulting in a $1.23 million gain on divestiture recognized in the YTD period. This segment is now classified as discontinued operations.
• Debt Reduction: The Company extinguished $23.96 million in related-party convertible seller notes by converting them to equity, recognizing a $22.79 million gain in additional paid-in capital.

Guidance, Outlook, and Risks

• Outlook: Management believes current liquidity (cash, stablecoins, and liquid digital assets) is sufficient to meet obligations for at least 12 months. The Company intends to continue accumulating Worldcoin (WLD) and other digital assets as a core treasury strategy.
• Subsequent Events:
  • Entered a strategic investment in Mythical Games, Inc. (Series D) in October 2025.
  • Amended ATM agreement to include Cantor Fitzgerald, authorizing up to $2.7 billion in offerings.
  • Issued additional shares under the ATM program for ~$99.8 million in net proceeds between Oct 1 and Nov 13, 2025.
• Key Risks:
  • Volatility: Earnings are now highly sensitive to digital asset price fluctuations due to ASU 2023-08 fair value accounting.
  • Custody & Security: Reliance on third-party custodians (Kraken, Coinbase, FalconX) exposes the Company to counterparty and cyber-security risks.
  • Regulatory: Uncertainty regarding the classification of WLD as a security and compliance with global KYC/AML regulations regarding biometric data collection.
  • Internal Controls: The Company disclosed a material weakness in internal controls over financial reporting related to limited accounting personnel and timely reporting, which persists as of September 30, 2025.

Investor Verification Checklist

• Digital Asset Valuation: Verify the fair value methodology for Worldcoin (WLD) and the concentration risk of holding a single asset class representing ~80% of total assets.
• Liquidity vs. Solvency: Assess the convertibility of digital assets to fiat currency to meet operating needs, given the negative operating cash flow from the core business.
• Internal Controls: Monitor the remediation plan for the material weakness in financial reporting controls.
• Customer Concentration: Note that one customer represented 90% of revenues in Q3 2025.
• Equity Dilution: Review the impact of the recent PIPE, ATM issuances, and warrant exercises on share count (increased from ~2.5M to ~187M shares outstanding).