Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Unless otherwise indicated, the terms "we," "us," "our," "Eightco," and the "Company" refer to Eightco Holdings Inc. together with its consolidated subsidiaries. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q.

This section contains forward-looking statements within the meaning of the federal securities laws, including statements regarding our strategy, plans, future financial performance, liquidity, and capital allocation framework. These statements involve risks, uncertainties, and assumptions that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause such differences are discussed under the section titled "Cautionary Note Regarding Forward-Looking Statements" in this Quarterly Report, as well as under "Risk Factors" in this Quarterly Report and in our most recent Annual Report on Form 10-K. We undertake no obligation to update any forward-looking statements except as required by law.

Overview

Eightco Holdings Inc. (NASDAQ: ORBS) operates Forever 8, an e-commerce inventory solutions business acquired in October 2022, which is the Company's sole operating and reportable segment. The Company also maintains a Digital Asset Treasury Strategy, under which it holds Worldcoin (WLD) and other digital assets, and holds strategic investments in privately held frontier technology companies, including an indirect interest in OpenAI. Through its Worldcoin holdings and strategic investments, the Company is focused on digital identity and Proof of Human (PoH) verification across three areas: consumer, enterprise, and gaming authentication.

Our corporate headquarters are located in Easton, Pennsylvania, and our common stock is listed on the Nasdaq Capital Market under the symbol "ORBS."

Forever 8

Forever 8 provides funding solutions and inventory management services for e-commerce businesses, enabling sellers to maintain optimal stock levels without tying up their own capital. Forever 8 is the Company's sole operating segment and source of revenue. For the fiscal years ended December 31, 2025 and 2024, Forever 8 generated revenues of $32,981,126 and $39,621,272, respectively. Forever 8's revenue base is highly concentrated. For the three months ended September 30, 2026, four customers represented approximately 46%, 29%, 13% and 12% of total revenues, respectively. For the three months ended September 30, 2025, one customer represented approximately 90% of total revenues. For the nine months ended September 30, 2026 and 2025, one customer represented approximately 98% and 86% of total revenues, respectively.

During the nine months ended September 30, 2026, the financial condition of Forever 8's largest customer deteriorated significantly. In response, the Company suspended new order fulfillment for this customer and ceased purchasing new inventory to support the relationship, and Forever 8 generated minimal revenue during the three months ended September 30, 2026. The Company is engaged in ongoing discussions with the customer regarding the resolution of amounts owed (Note 7 - Accounts Receivable).

Forever 8 is transitioning to a new funding model under which it purchases goods from suppliers under purchase orders placed for its e-commerce customers and invoices the customer upon shipment from the supplier, so that Forever 8 does not hold inventory after shipment. Customers repay Forever 8 through scheduled weekly payments, collected directly from the proceeds of the customer's e-commerce store where the platform permits, and otherwise by automatic debit from the customer's bank account. Forever 8 retains a security interest in the customer's store inventory and receivables. Forever 8 is currently onboarding customers under the new model.

Adoption of Digital Asset Treasury ("DAT") Strategy

Strategy Overview

On September 8, 2025, our Board of Directors approved the adoption of a Digital Asset Treasury Strategy under which Eightco holds digital assets, primarily Worldcoin (WLD), as part of a long-term treasury reserve framework. Under this policy, we may allocate excess liquidity, operating cash flows, and proceeds from financing transactions to the acquisition of digital assets.

This strategy combines the operating performance of Forever 8 with long-term digital asset holdings designed to enhance our capital base and provide shareholders with exposure to emerging decentralized technologies.

Rationale for Strategy

Key factors underlying the DAT Strategy include:

	●	The growth and potential of the Worldcoin ecosystem
	●	The belief that certain digital assets may serve as long-term stores of value
	●	The ability to report digital assets at fair value under ASU 2023-08
	●	Opportunities for differentiated long-term returns
	●	The availability of capital to scale a treasury strategy of meaningful size

Management expects digital assets to remain a significant component of our long-term capital allocation framework.

Capital Raising Activities

During the nine months ended September 30, 2026, we raised net proceeds of $226.2 million through our at-the-market ("ATM") equity offering program, including $10.2 million during the three months ended September 30, 2026.

A significant portion of the ATM proceeds was deployed to acquire digital assets and fund strategic investments. These capital raises materially strengthened our liquidity and expanded our consolidated balance sheet.

Digital Asset Holdings

As of September 30, 2026, our digital assets had a fair value of $205.4 million and consisted of:

	●	Worldcoin (WLD), with a fair value of $161.5 million
	●	Ethereum (ETH), with a fair value of $43.8 million

We also held USDC, a U.S. dollar-denominated stablecoin, of $82.6 million, which is presented separately from digital assets.

Digital assets are custodied with institutional-grade providers, including Kraken, Coinbase, and FalconX.

Custody, Concentrations and Transfer Restrictions

As of September 30, 2026, our digital assets were held with two institutional-grade third-party custodians, Kraken and Coinbase, with approximately 60% held with Coinbase (see Note 3 - Concentrations of Credit Risk). From time to time, a significant portion of our digital assets may be concentrated with a single custodian. Digital assets may be subject to withdrawal, settlement, or transfer restrictions pursuant to platform or network constraints. We continually evaluate custodian concentration and portability risk as part of our liquidity planning.

Accounting for Digital Assets

Effective January 1, 2025, we adopted ASU 2023-08, which requires eligible digital assets to be measured at fair value, with changes recognized in net income each reporting period.

Key effects include:

	●	Digital assets are presented at fair value on our condensed consolidated balance sheets
	●	Unrealized gains and losses from price fluctuations flow through earnings
	●	Earnings may be more volatile due to digital asset market movements
	●	Historical impairment-only accounting no longer applies

This measurement model increases transparency but introduces meaningful volatility tied to the valuation of Worldcoin and other digital assets.

Volatility and Earnings Sensitivity

Because we measure eligible crypto assets at fair value under ASU 2023-08, period-to-period changes in the market price of Worldcoin (WLD) and other digital assets will directly affect reported earnings and, to the extent realized on conversion, cash flows. This may result in material earnings volatility unrelated to the operating performance of Forever 8.

Key Components of our Results of Operations

Revenues

We generate our revenues from inventory financing and inventory management services through our wholly owned subsidiary, Forever 8. Our revenues are primarily derived from the purchase and resale of consumer products to e-commerce retailers under our inventory management solutions model. The Company does not generate revenue from its digital asset activities.

Cost of Revenues

Cost of revenues consists primarily of the cost of inventory sold to customers, inventory write-downs, and related freight, fulfillment, and handling costs associated with our Forever 8 activities.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include payroll and employee-related expenses, share-based compensation, professional fees, insurance, technology and software costs, bad debt expense, and other overhead required to support both our Forever 8 operations and our corporate infrastructure. SG&A also includes expenses associated with supporting the Digital Asset Treasury function, including custodial fees, compliance costs, and professional services related to digital asset oversight.

Impairments

Impairments consist of charges recognized when the carrying amount of an asset is not recoverable, including impairments of receivables and other assets of the Forever 8 business.

Interest Expense, Net

Interest expense reflects the cost of borrowings under our lines of credit. Interest income primarily includes interest earned on cash equivalents and short-term investments.

Change in Fair Value of Digital Assets

Beginning in September 2025, following the deployment of our Digital Asset Treasury strategy, the Company holds digital assets measured at fair value in accordance with ASU 2023-08. Unrealized gains and losses from changes in the fair value of digital assets are recognized in earnings in the period in which they occur, and realized gains and losses on disposals are presented separately as "Realized losses on digital assets." Because the DAT is not primarily intended to serve as a revenue-generating activity, changes in fair value represent a key driver of period-over-period volatility in our results of operations.

Change in Fair Value of Short-Term Investments

Change in fair value of short-term investments consists of realized and unrealized gains and losses on U.S. government securities and other short-term investments.

Gain on Divestiture

Gain on divestiture represents gains recognized in connection with the sale of assets, including the gain recognized on the sale of the Ferguson Containers corrugated packaging business on April 7, 2025.

Gain on Extinguishment of Liabilities

Gain on extinguishment of liabilities includes gains recognized when outstanding liabilities are settled for amounts less than their carrying value, or when obligations are legally extinguished.

Other Income

Other income consists primarily of interest income on the Company's loans held-for-investment, consisting of the Wattum Management Inc. note and the Reichard Containers, LLC note, rewards income on stablecoins, and other miscellaneous items.

Results of Operations

Three Months Ended September 30, 2026 versus Three Months Ended September 30, 2025

The following table sets forth information comparing the components of net income (loss) for the three months ended September 30, 2026 and 2025:

		Three Months Ended September 30,								Period over Period Change
		2026				2025				$				%
Revenues, net		$	88,739			$	5,300,527			$	(5,211,788	)			-98.3	%
Cost of revenues			377,109				5,496,377				(5,119,268	)			-93.1	%
Gross loss			(288,370	)			(195,850	)			(92,520	)			-47.2	%
Operating expenses:
Selling, general and administrative			3,284,814				6,002,208				(2,717,394	)			-45.3	%
Impairments			-				-				-				0.0	%
Operating loss			(3,573,184	)			(6,198,058	)			2,624,874				42.4	%
Other income (expense):
Interest expense, net			(308,759	)			(1,095,133	)			786,374				71.8	%
Gain on divestiture			-				-				-				0.0	%
Gain on extinguishment of liabilities			-				-				-				0.0	%
Change in fair value of digital assets			59,264,739				(18,639,017	)			77,903,756				418.0	%
Change in fair value of short-term investments			(23,666	)			-				(23,666	)			-100.0	%
Reserve for credit losses on notes receivable			(2,224,252	)			-				(2,224,252	)			-100.0	%
Other income			1,235,897				87,990				1,147,907				1,304.6	%
Total other income (expense), net			57,943,959				(19,646,160	)			77,590,119				394.9	%
Income (loss) before income taxes			54,370,775				(25,844,218	)			80,214,993				310.4	%
Income tax expense (benefit)			-				-				-				0.0	%
Net income (loss) from continuing operations			54,370,775				(25,844,218	)			80,214,993				310.4	%
Net income (loss) from discontinued operations			-				-				-				0.0	%
Net income (loss)		$	54,370,775				(25,844,218	)			80,214,993				310.4	%

Revenue

For the three months ended September 30, 2026, revenues were $88,739, a decrease of $5,211,788, or 98.3%, compared to revenues of $5,300,527 for the three months ended September 30, 2025. The decrease reflects the suspension of new order fulfillment for Forever 8's largest customer and the cessation of new inventory purchases under Forever 8's legacy operating model.

Cost of Revenues

Cost of revenues was $377,109 for the three months ended September 30, 2026, compared to $5,496,377 for the three months ended September 30, 2025, a decrease of $5,119,268, or 93.1%, corresponding to the reduction in revenues.

Gross Loss

Gross loss was $(288,370) for the three months ended September 30, 2026, compared to a gross loss of $(195,850) for the three months ended September 30, 2025. The gross loss in the 2026 period reflects the liquidation of remaining Forever 8 inventory at amounts below its carrying value. The gross loss in the 2025 period reflected inventory and accounts receivable write-downs associated with Forever 8's exit from its liquidation model.

Operating Expenses

Selling, general and administrative ("SG&A") expenses were $3,284,814 for the three months ended September 30, 2026, compared to $6,002,208 for the three months ended September 30, 2025, a decrease of $2,717,394, or 45.3%.

The decrease was primarily attributable to:

	●	Lower share-based compensation, which was $0.2 million for the three months ended September 30, 2026, compared to $2.3 million for the three months ended September 30, 2025;
	●	Lower professional fees and advisory costs, as the 2025 period included costs incurred in connection with the PIPE financing and the launch of the Digital Asset Treasury strategy; and
	●	Lower costs associated with the Forever 8 business which include wages, platform, warehousing and other costs incurred related to liquidation brands that Forever 8 was running the e-commerce stores.

The Company did not recognize impairment charges or bad debt expense during the three months ended September 30, 2026 or 2025.

Interest Expense

Net interest expense was $(308,759) for the three months ended September 30, 2026, compared to $(1,095,133) for the three months ended September 30, 2025, a decrease of $786,374, or 71.8%, reflecting lower average borrowings under the Company's lines of credit.

Change in Fair Value of Digital Assets

The Company recognized a gain of $59,264,739 related to changes in the fair value of its digital asset holdings during the three months ended September 30, 2026, reflecting higher market prices for our digital asset holdings at September 30, 2026 compared to June 30, 2026. For the three months ended September 30, 2025, the Company recognized a loss of $(18,639,017) on digital assets acquired following the adoption of the DAT Strategy in September 2025.

Change in Fair Value of Short-Term Investments

The Company recognized a loss of $(23,666) related to changes in the fair value of its short-term investments during the three months ended September 30, 2026, reflecting the reversal of unrealized gains recognized in the first half of 2026. There were no comparable amounts in the prior-year period.

Credit Loss on Note Receivable

The Company recorded a credit loss of $2,224,252 during the three and nine months ended September 30, 2026, representing a full allowance on the Wattum Management Inc. note, which matured in October 2026 and has not been repaid. There were no comparable amounts in the prior-year periods.

Other Income

Other income was $1,235,897 for the three months ended September 30, 2026, compared to $87,990 for the three months ended September 30, 2025, an increase of $1,147,907, primarily due to USDC rewards earned on stablecoin balances held with a custodian under the custodian's rewards program. The Company does not stake, lend, or pledge its digital assets to earn these rewards.

Income Tax Expense

Income tax expense was $0 for both periods presented. The Company continues to maintain a full valuation allowance on its net deferred tax assets.

Net Income (Loss)

Net income was $54,370,775 for the three months ended September 30, 2026, compared to a net loss of $(25,844,218) for the three months ended September 30, 2025. The change was driven primarily by the gain on digital assets in the 2026 period compared to a loss in the 2025 period.

Nine Months Ended September 30, 2026 versus Nine Months Ended September 30, 2025

The following table sets forth information comparing the components of net income (loss) for the nine months ended September 30, 2026 and 2025:

		Nine Months Ended September 30,								Period over Period Change
		2026				2025				$				%
Revenues, net		$	9,719,134			$	22,793,160			$	(13,074,026	)			-57.4	%
Cost of revenues			9,691,997				20,930,455				(11,238,458	)			-53.7	%
Gross profit			27,137				1,862,705				(1,835,568	)			-98.5	%
Operating expenses:
Selling, general and administrative			20,711,766				10,683,465				10,028,301				93.9	%
Impairments			5,211,824				-				5,211,824				100.0	%
Total operating expenses			25,923,590				10,683,465				15,240,125				142.7	%
Operating loss			(25,896,453	)			(8,820,760	)			(17,075,693	)			-193.6	%
Other income (expense):
Interest expense, net			(938,059	)			(3,660,662	)			2,722,603				74.4	%
Gain on divestiture			-				1,231,774				(1,231,774	)			-100.0	%
Gain on extinguishment of liabilities			870,000				-				870,000				100.0	%
Change in fair value of digital assets			47,014,035				(18,639,017	)			65,653,052				352.2	%
Change in fair value of short-term investments			-				-				-				0.0	%
Realized losses on digital assets			(25,353,418	)			-				(25,353,418	)			-100.0	%
Reserve for credit losses on notes receivable			(2,224,252	)			-				(2,224,252	)			-100.0	%
Other income			2,464,143				191,858				2,272,285				1,184.4	%
Total other income (expense), net			21,832,449				(20,876,047	)			42,708,496				204.6	%
Income (loss) before income taxes			(4,064,004	)			(29,696,807	)			25,632,803				86.3	%
Income tax expense (benefit)			-				(28,793	)			28,793				100.0	%
Net income (loss) from continuing operations			(4,064,004	)			(29,668,014	)			25,604,010				86.3	%
Net income (loss) from discontinued operations			-				105,553				(105,553	)			-100.0	%
Net income (loss)		$	(4,064,004	)		$	(29,562,461	)		$	25,498,457				86.3	%

Revenue

For the nine months ended September 30, 2026, revenues were $9,719,134, a decrease of $13,074,026, or 57.4%, compared to revenues of $22,793,160 for the nine months ended September 30, 2025. The decrease reflects the significant deterioration in the financial condition of Forever 8's largest customer, a distributor of consumer cellular products that accounted for approximately 98% and 86% of revenues for the nine months ended September 30, 2026 and 2025, respectively, and the Company's resulting suspension of new order fulfillment for that customer during 2026 (Note 7 - Accounts Receivable).

Cost of Revenues

Cost of revenues was $9,691,997 for the nine months ended September 30, 2026, compared to $20,930,455 for the nine months ended September 30, 2025, a decrease of $11,238,458, or 53.7%, corresponding to the reduction in revenues.

Gross Profit

Gross profit was $27,137 for the nine months ended September 30, 2026, compared to $1,862,705 for the nine months ended September 30, 2025, a decrease of $1,835,568, or 98.5%. Gross margin was 0.3%, compared to 8.2% in the prior-year period.

Operating Expenses

SG&A expenses were $20,711,766 for the nine months ended September 30, 2026, compared to $10,683,465 for the nine months ended September 30, 2025, an increase of $10,028,301, or 93.9%.

The increase was primarily attributable to:

●

Bad debt expense of $1,512,432 mostly attributable to Forever 8's largest customer;

●

Higher share-based compensation, which was $5.7 million for the nine months ended September 30, 2026, compared to $2.4 million for the nine months ended September 30, 2025;

●

Higher professional fees and advisory costs associated with the Company's capital raising and the ongoing implementation of its Digital Asset Treasury strategy; and

●

Higher technology, compliance, and custodial-related costs associated with digital asset oversight.

The Company also recognized impairment charges of $5,211,824 during the second quarter of 2026 on a receivable arising from the disposition of Company-funded inventory by Forever 8's largest customer without the Company's authorization (Note 7 - Accounts Receivable). There were no impairment charges in the prior-year period.

Interest Expense

Net interest expense was $(938,059) for the nine months ended September 30, 2026, compared to $(3,660,662) for the nine months ended September 30, 2025, a decrease of $2,722,603, or 74.4%, reflecting lower average borrowings under the Company's lines of credit.

Gain on Divestiture

The Company recognized no gain on divestiture during the nine months ended September 30, 2026, compared to a gain of $1,231,774 during the nine months ended September 30, 2025 on the sale of the Ferguson Containers corrugated packaging business on April 7, 2025.

Gain on Extinguishment of Liabilities

The Company recognized a gain on extinguishment of liabilities of $870,000 during the nine months ended September 30, 2026, related to the fulfillment of settlement agreements for past rents and severance obligations during the first quarter of 2026. There was no comparable activity in the prior-year period.

Change in Fair Value of Digital Assets

The Company recognized a net gain of $47,014,035 related to changes in the fair value of its digital asset holdings during the nine months ended September 30, 2026, including a gain of $59,264,739 in the third quarter of 2026. For the nine months ended September 30, 2025, the Company recognized a loss of $(18,639,017) on digital assets acquired following the adoption of the DAT Strategy in September 2025.

Change in Fair Value of Short-Term Investments

The Company recognized no net change in the fair value of its short-term investments for the nine months ended September 30, 2026, as unrealized gains of $23,666 recognized in the first half of 2026 reversed in the third quarter. There were no comparable amounts in the prior-year period.

Realized Losses on Digital Assets

Realized losses on digital assets were $25,353,418 for the nine months ended September 30, 2026. These losses primarily related to sales of Ethereum (ETH) that the Company subsequently repurchased.

Credit Loss on Note Receivable

The Company recorded a credit loss of $2,224,252 during the three and nine months ended September 30, 2026, representing a full allowance on the Wattum Management Inc. note, which matured in October 2026 and has not been repaid. There were no comparable amounts in the prior-year periods.

Other Income

Other income was $2,464,143 for the nine months ended September 30, 2026, compared to $191,858 for the nine months ended September 30, 2025, an increase of $2,272,285 primarily due to USDC rewards earned on stablecoin balances held with a custodian under the custodian's rewards program. The Company does not stake, lend, or pledge its digital assets to earn these rewards.

Loss Before Income Taxes

Loss before income taxes was $(4,064,004) for the nine months ended September 30, 2026, compared to $(29,696,807) for the nine months ended September 30, 2025. The lower loss is primarily attributable to the net gain on digital assets of $21,660,617 (a $47,014,035 change in fair value, partially offset by $25,353,418 of realized losses) in the 2026 period compared to a loss of $(18,639,017) in the 2025 period, the $870,000 gain on extinguishment of liabilities, and lower net interest expense, partially offset by higher SG&A expenses, including bad debt expense, $5,211,824 impairment charge, and the $2,224,252 credit loss on note receivable.

Income Tax Expense

Income tax expense was $0 for the nine months ended September 30, 2026, compared to an income tax benefit of $(28,793) for the nine months ended September 30, 2025. The Company continues to maintain a full valuation allowance on its net deferred tax assets.

Net Loss

Net loss was $(4,064,004) for the nine months ended September 30, 2026, compared to $(29,562,461) for the nine months ended September 30, 2025, which included net loss from continuing operations of $(29,668,014) and net income from discontinued operations of $105,553.

Liquidity and Capital Resources

Overview

The Company funds its operations primarily through equity financing, including proceeds from its ATM program, and has historically also used private placement transactions and borrowings under lines of credit. These proceeds have been deployed primarily into the Company's Digital Asset Treasury and strategic investments.

As of September 30, 2026, the Company had cash and cash equivalents of $43,953,392, compared to $58,501,108 as of December 31, 2025. In addition to cash, the Company held short-term investments of $138,803, stablecoins of $82,598,374 and digital assets at fair value of $205,358,377 as of September 30, 2026. Total assets were $446,252,990 at September 30, 2026, compared to $250,193,124 at December 31, 2025, and total liabilities were $11,134,850 at September 30, 2026, compared to $17,975,088 at December 31, 2025, resulting in total stockholders' equity of $435,118,140 at September 30, 2026, compared to $232,218,036 at December 31, 2025.

Outstanding debt as of September 30, 2026 consisted of $6,625,000 under the Company's lines of credit and $450,000 under lines of credit with related parties, for total outstanding lines of credit of $7,075,000. Outstanding debt as of December 31, 2025 consisted of $8,150,000 under the Company's lines of credit and $2,590,000 under lines of credit with related parties, for total outstanding lines of credit of $10,740,000. The lines of credit bear interest at rates ranging from 12% to 18% and are unsecured. On October 13, 2026, the Company repaid an additional $150,000 of outstanding principal.

Liquidity Profile

As of September 30, 2026, our liquidity resources consisted of $44.0 million of cash and cash equivalents, $0.1 million of short-term investments, and approximately $82.6 million of U.S. dollar-denominated stablecoins, for total near-cash liquidity of approximately $126.7 million. We also held approximately $205.4 million of other digital assets, consisting of Worldcoin (WLD) and Ethereum (ETH), which are subject to market price volatility. We actively manage working capital by converting stablecoins and, when appropriate, other digital assets to U.S. dollars to meet operating needs.

During the nine months ended September 30, 2026, we used $12.3 million of cash in operating activities, or approximately $1.4 million per month. Our net loss of $(4.1) million for the nine-month period included significant non-cash items, including the net gain on digital assets of $21.7 million, share-based compensation of $5.7 million, the impairment charge of $5.2 million, bad debt expense, net of $1.5 million, and the $2.2 million reserve for credit loss on note receivables. Based on our current operating cash use, we believe our near-cash liquidity is sufficient to fund our operating cash needs substantially in excess of the next 12 months, before consideration of additional capital that may be raised under our ATM program or monetization of our other digital asset and strategic investment holdings.

Sources of Liquidity

ATM Program

During the nine months ended September 30, 2026, the Company sold 224,248,030 shares of common stock under its ATM program for net proceeds of $226.2 million, including 9,250,000 shares for net proceeds of $10.2 million during the three months ended September 30, 2026. Proceeds were used to acquire digital assets, fund strategic private company investments, and support working capital needs.

Digital Assets as Liquidity

Certain digital assets, particularly U.S. dollar-denominated stablecoins, function as near-cash liquidity sources and may be converted to U.S. dollars as needed.

Uses of Liquidity

Digital Asset Purchases

We deploy a substantial portion of ATM proceeds to acquire digital assets. During the nine months ended September 30, 2026, we purchased digital assets of $39.9 million, including $5.0 million acquired in exchange for USDC, and received proceeds of $22.5 million from sales of digital assets. As of September 30, 2026, we held approximately $82.6 million of U.S. dollar-denominated stablecoins and digital assets at fair value of approximately $205.4 million, consisting of Worldcoin (WLD) and Ethereum (ETH). Digital assets are measured at fair value under ASU 2023-08, with changes recognized in net income, and are custodied with institutional-grade providers, including Kraken, Coinbase, and FalconX.

Strategic Private Company Investments

We also deploy liquidity into strategic equity investments in frontier technology companies as part of our long-term capital allocation strategy. In October 2025, we invested approximately $1 million in Series D Preferred Stock of Mythical Games, Inc., a developer of blockchain-based video game ecosystems. In March 2026, we invested $92.6 million in indirect beneficial interests in OpenAI preferred stock and approximately $18 million in Beast Industries, the business platform of content creator MrBeast. An additional $7 million capital commitment to Beast Industries expired unexercised on May 9, 2026. As of September 30, 2026, the carrying value of our strategic private company investments was $111.7 million.

Forever 8

Following the suspension of new order fulfillment for its largest customer, Forever 8 ceased purchasing new inventory under its legacy operating model, and inventory was $0 as of September 30, 2026. Future inventory funding requirements of Forever 8 are expected to be met from corporate liquidity.

Operating and Corporate Needs

Liquidity is also used to support routine corporate expenses, personnel, professional fees, vendor obligations, and other working capital needs.

Share Repurchases

During the three months ended September 30, 2026, we repurchased 29,189,746 shares of our common stock for an aggregate cost of $23,726,714, including commissions, and from October 1, 2026 through November 13, 2026, we repurchased an additional 33,800,295 shares for an aggregate cost of $27,817,366, including commissions. As of September 30, 2026, approximately $101.6 million remained available under the Share Repurchase Program. Future repurchases, if any, will depend on market conditions and our liquidity needs.

Digital Asset Volatility

During the nine months ended September 30, 2026, we recognized a net gain of approximately $21.7 million on digital assets, consisting of a $47.0 million gain from changes in fair value, including a $59.3 million gain in the third quarter, partially offset by $25.4 million of realized losses on sales of digital assets during the first half of 2026.

Future Liquidity Considerations

Our liquidity in future periods will be influenced by:

	●	The fair value of digital assets held under the DAT Strategy
	●	Market conditions affecting potential capital raises
	●	Working capital needs of Forever 8
	●	Digital asset market liquidity and volatility
	●	Regulatory developments affecting digital asset custody, trading, and classification
	●	Broader macroeconomic conditions affecting e-commerce demand

Based on current assumptions and our existing near-cash liquidity of approximately $126.7 million, our other digital asset and strategic equity investment holdings, our continued access to capital through our ATM program, and our currently anticipated operating cash use of approximately $1.4 million per month, we believe our liquidity resources are sufficient to support both our operating business and Digital Asset Treasury Strategy for at least the next twelve months.

Cash Flows

Since inception, Eightco and its subsidiaries have primarily used its available cash to fund its operations. The following table sets forth a summary of cash flows for the periods presented:

		For the Nine Months Ended September 30,
		2026				2025
Cash provided by (used in):
Operating Activities		$	(12,346,909	)		$	(1,279,248	)
Investing Activities			(199,973,299	)			(304,865,683	)
Financing Activities			197,772,492				329,618,207
Net increase (decrease) in cash and cash equivalents		$	(14,547,716	)		$	23,473,276

Cash Flows for the Nine Months Ended September 30, 2026 and 2025

Operating Activities

Net cash used in operating activities was $(12,346,909) during the nine months ended September 30, 2026, which consisted primarily of the net loss of $(4,064,004), adjusted for non-cash items including the change in fair value of digital assets of $(47,014,035), losses on disposal of digital assets of $25,353,418, income from rewards on stablecoins of $(1,119,209), share-based compensation of $5,704,993, the impairment charge of $5,211,824, and the allowance for credit losses of $1,512,432, and $2,224,252 reserve for credit loss on note receivables. Changes in operating assets and liabilities used cash of $(161,752), primarily reflecting decreases in accounts payable of $(1,683,789) and accrued expenses and other current liabilities of $(1,491,449) and an increase in accounts receivable of $(1,179,627), partially offset by decreases in inventory of $2,422,014 and prepaid expenses and other current assets of $1,771,100.

Net cash used in operating activities was $(1,279,248) during the nine months ended September 30, 2025, which consisted primarily of the net loss of $(29,562,461), adjusted for non-cash items including the change in fair value of digital assets of $18,639,017, share-based compensation of $2,442,906, depreciation and amortization of $1,764,410, and amortization of debt issuance costs of $750,000, partially offset by the gain on sale of assets of $(1,231,774). Changes in operating assets and liabilities provided cash of $5,884,654, primarily reflecting decreases in inventory of $3,036,860 and accounts receivable of $1,337,244 and an increase in accrued expenses and other current liabilities of $960,916.

Investing Activities

Net cash used in investing activities was $(199,973,299) during the nine months ended September 30, 2026, compared to $(304,865,683) for the nine months ended September 30, 2025. Investing activities in 2026 consisted primarily of purchases of short-term investments of $(391,726,027), purchases of other investments of $(110,674,952), purchases of stablecoins of $(90,495,128), purchases of digital assets of $(34,922,088), and purchases of options on digital assets of $(1,997,523), partially offset by proceeds from the sale of short-term investments of $391,587,224, proceeds from the sale of digital assets of $22,524,390, proceeds from the sale of stablecoins of $13,998,338, proceeds from the settlement of options on digital assets of $1,616,732, and repayments of principal under loans held-for-investment of $115,735. In addition, the Company acquired $5,000,000 of digital assets in exchange for stablecoins, which is presented as a non-cash investing activity. Investing activities in 2025 consisted primarily of purchases of digital assets of $(305,299,304) following the adoption of the DAT Strategy.

Financing Activities

Net cash provided by financing activities was $197,772,492 during the nine months ended September 30, 2026, compared to $329,618,207 for the nine months ended September 30, 2025. Financing activities in 2026 consisted primarily of net proceeds from the issuance of common stock under the ATM program of $226,164,206, partially offset by net payments for the repurchase of common stock of $(23,726,714), net repayments under lines of credit of $(3,665,000), and a $(1,000,000) prepayment for a share repurchase option. Financing activities in 2025 consisted primarily of net proceeds of $329,852,895 from the issuance of common stock in the PIPE and ATM transactions.

The Company did not have any off-balance sheet arrangements as of September 30, 2026.

Known Trends, Events, Uncertainties and Factors That May Affect Future Operations

Our results and liquidity may be materially affected by:

	●	Digital asset market volatility, including price, volume, and spreads for WLD and other tokens;
	●	Regulatory developments affecting custody, stablecoins, or exchange operations and their impact on access, withdrawals, or pricing;
	●	Custodian concentration and counterparty risk, including operational incidents, solvency, or cybersecurity;
	●	Capital markets conditions affecting our ability to raise additional equity through our ATM program or other transactions;
	●	The resolution of amounts owed by Forever 8's largest customer;
	●	Interest rate levels influencing borrowing costs and customer demand for inventory financing; and
	●	Macroeconomic factors, including consumer demand, e-commerce trends, geopolitics, inflation, and credit availability.

Contractual Obligations and Commitments

The Company has no debt covenants that require certain financial information to be met. The following summarizes our material cash requirements as of September 30, 2026:

Consulting Fees. Under the Amended and Restated DACA, we are obligated to pay a consulting fee equal to 1% per annum of assets under management. Based on current AUM levels, we expect cash consulting fees of approximately $4.0 million over the next 12 months.

Interest on Lines of Credit. Based on current borrowing levels and interest rates ranging from 12% to 18%, we expect interest expense under our lines of credit of approximately $0.8 million to $1.3 million over the next 12 months.

Lines of Credit Principal. As of September 30, 2026, $7,075,000 of principal was outstanding under our lines of credit, including $450,000 under lines of credit with related parties, all of which are due on demand. On October 13, 2026, we repaid $150,000 of this principal.

Compensation and Severance Arrangements. Our compensation commitments include annual cash compensation of $850,000 payable to director Thomas Lee, an annual base salary of $550,000 under the Amended and Restated Compensation Agreement with our Chief Executive Officer for a term of up to three years from June 5, 2026, and annual cash retainers of $100,000 payable to each of our other non-employee directors. In addition, $1,265,531 of restructuring and severance obligations remained unpaid as of September 30, 2026, and the timing of payment has not been determined.

Critical Accounting Policies and Significant Judgments and Estimates

This discussion and analysis of the Company's financial condition and results of operations is based on the Company's condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. In accordance with U.S. GAAP, the Company bases its estimates on historical experience and on various other assumptions the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

For information on the Company's significant accounting policies please refer to Note 2 to the Company's Financial Statements included in this Quarterly Report.

Strategic Private Company Investments. Our investments in privately held companies, including our indirect interest in OpenAI, Beast Industries, and Mythical, Inc., had a carrying value of $111,674,951 as of September 30, 2026. These investments do not have readily determinable fair values and are accounted for under the measurement alternative in ASC 321, under which they are carried at cost, less impairment, and adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer. Each reporting period, we perform a qualitative assessment of whether impairment indicators exist, considering factors such as the investee's financial performance, business prospects, financing activity, and market conditions, and we evaluate whether transactions in the investee's securities represent observable price changes. These assessments require significant judgment, particularly because information available to us about these privately held companies is limited and, in the case of our OpenAI interest, is held through an investment vehicle. If an impairment indicator is identified, we estimate the fair value of the investment and recognize an impairment for any amount by which the carrying value exceeds fair value. We identified no impairment indicators or observable price changes during the nine months ended September 30, 2026. A 10% decrease in the carrying value of these investments would reduce our net income by approximately $11.2 million.

Allowance for Credit Losses. We estimate expected credit losses on accounts receivable and loans held-for-investment based on the financial condition of the counterparty, historical payment behavior, the value of any collateral, and current conditions. During the nine months ended September 30, 2026, we recorded net bad debt expense of $1,512,432 and an impairment charge of $5,211,824 related to Forever 8's largest customer, whose receivables of $7,170,247 were fully reserved as of September 30, 2026, and a credit loss of $2,224,252 representing a full allowance on the Wattum Management Inc. note, which matured in October 2026 and has not been repaid. Estimating these allowances required significant judgment regarding the counterparties' ability to pay and the outcome of ongoing recovery discussions. Because these balances are fully reserved, any amounts collected will be recognized as recoveries in the period received. As of September 30, 2026, our remaining exposure to credit losses consisted primarily of net accounts receivable of $101,018 and the Reichard Containers, LLC note of $2,175,038.

Income Taxes. We record a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. In evaluating the need for a valuation allowance, we consider our history of losses, the expected timing of reversal of temporary differences, and projections of future taxable income. Given our history of losses and the uncertainty of future taxable income, including income that may arise from changes in the fair value of our digital assets, we maintain a full valuation allowance against our net deferred tax assets. A change in this assessment could result in the recognition of a tax benefit in the period in which the change occurs.