Eightco (US:OCTO)2022-08-19 21:15Financial Performance - For the three months ended June 30, 2022, revenues increased by $5,339,265 or 266.07% compared to the same period in 2021, primarily due to increased sales from mining equipment[114]. - Cost of revenues for the same period increased by $5,142,586 or 366.21%, attributed to higher total revenues and increased costs of materials and production[115]. - Gross profit for the three months ended June 30, 2022, increased by $196,679 or 32.65%, driven by higher revenues offset by increased costs[116]. - For the six months ended June 30, 2022, revenues increased by $7,301,280, or 193.96%, compared to the same period in 2021, primarily due to increased sales from mining equipment shipments[125]. - Cost of revenues for the six months ended June 30, 2022, increased by $7,033,811, or 261.73%, compared to the same period in 2021, driven by higher material and production costs[126]. - Gross profit for the six months ended June 30, 2022, increased by $267,449, or 24.84%, compared to the same period in 2021, reflecting increased revenues offset by rising costs[127]. - Net loss for the six months ended June 30, 2022, was $4,593,901, compared to a net loss of $30,184 for the same period in 2021, marking an increase of 15,119.66%[133]. - The company reported total other income of $102,857 for the six months ended June 30, 2022, compared to $21,589 for the same period in 2021, an increase of 376.43%[131]. Expenses - Selling, general and administrative expenses rose to $4,292,308, an increase of $3,645,889 or 469.80%, mainly due to higher payroll and operating costs as a standalone public company[118]. - Selling, general and administrative expenses rose to $6,214,103 for the six months ended June 30, 2022, an increase of $5,073,629, or 444.87%, primarily due to higher payroll and professional fees[128]. Cash Flow and Financing - Net cash used in operating activities was ($5,894,179) for the six months ended June 30, 2022, compared to ($246,647) for the same period in 2021[137]. - Net cash provided by financing activities was $45,001,510 for the six months ended June 30, 2022, significantly up from $323,684 in the same period in 2021, largely due to debt and equity issuance[139]. - The company has approximately $40 million in cash, which it believes will be sufficient to fund operations for the next 12 months[135]. - The company has no significant debt obligations other than approximately $7 million related to the Note Private Placement[134]. Business Operations and Structure - The company operates independently following the spin-off of its Packaging Business, Web3 Business, and Bitcoin Mining Services Business from Vinco[93]. - The Packaging Business, Ferguson Containers, has been operational for over 50 years and focuses on custom packaging solutions[99]. - The Web3 Business, BlockHiro, LLC, plans to utilize decentralized blockchain technology in consumer-facing industries and aims to finalize a digital coin minting platform in 2022[100]. - The company is now an independent, publicly traded entity holding assets and liabilities associated with the Cryptyde Businesses after the Separation[157]. - The company incurred debt from the Note Private Placement in connection with the Separation and may continue to incur further debt in the ordinary course of business[158]. Separation and Distribution Agreements - The Separation and Distribution Agreement governs the overall terms of the Separation, including the allocation of assets and liabilities between the company and Vinco[162]. - The company and Vinco entered into a Tax Matters Agreement to govern tax responsibilities, with the company generally responsible for its own taxes and certain taxes of Vinco related to the Cryptyde Businesses[169]. - The Tax Matters Agreement prohibits the company from taking certain actions that could jeopardize the intended tax treatment of the Transfer and Distribution for a two-year period following the Distribution Date[171]. - The company is required to use reasonable efforts to obtain necessary consents and approvals for the transfer of specified assets between the companies post-Distribution[163]. - The Separation and Distribution Agreement includes provisions for uncapped cross-indemnities to allocate financial responsibility for obligations and liabilities between the company and Vinco[166]. - The company has no unvested equity awards held by employees remaining after the Separation[155]. - The company made cash payments to employees for any fractional share interests resulting from adjustments to outstanding Vinco awards[156]. - No other material governmental or regulatory approvals were necessary to consummate the Distribution, aside from the required registration and listing requirements[159].