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) is building the authentication and trust layer for the post-AGI world. Through a first-of-its-kind Worldcoin digital asset treasury strategy and a portfolio of strategic investments in frontier technology companies, the Company is establishing a universal foundation for digital identity and Proof of Human (PoH) verification. The Company’s mission is organized around three core pillars: consumer authentication, enterprise authentication, and gaming authentication. The Company also operates Forever 8, an e-commerce inventory solutions business acquired in October 2022, which represents its sole revenue-generating operating segment. 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 primary 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, with one customer representing approximately 89% and 75% of total revenues for the fiscal years ended December 31, 2025 and 2024, respectively. 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 reflects a dual-pillar model combining (i) the operating performance of Forever 8, and (ii) 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. 27 Capital Raising Activities During the quarter ended June 30, 2026, we completed substantial financing transactions to support the DAT Strategy: ● We generated additional proceeds through our at-the-market (“ATM”) equity offering program. A significant portion of the ATM proceeds were deployed to acquire digital assets and invest in strategic investments. These capital raises materially strengthened our liquidity and expanded our consolidated balance sheet. Digital Asset Acquisitions Our holdings consist primarily of: ● Worldcoin (WLD) ● Ethereum (ETH) ● U.S. dollar-denominated stablecoins ● Other digital assets used for liquidity management, trade settlement, or operational purposes Digital assets are custodied with institutional-grade providers, including Kraken, Coinbase, and FalconX. Custody, Concentrations and Transfer Restrictions As of June 30, 2026, substantially all digital assets were held with a small number of U.S.-based institutional custodians under cold-storage arrangements. From time to time, a significant portion of our digital assets may be concentrated with a single custodian. Certain assets (including staking-ineligible or restricted tokens, if any) 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 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 cash provided by (used in) operating activities to the extent realized on conversion. This may result in material earnings volatility unrelated to our Forever 8 operating performance. 28 Critical Accounting Policies and Significant Judgments and Estimates There were no material changes to our critical accounting policies during the three months ended June 30, 2026, other than the adoption of ASU 2023-08, which requires eligible crypto assets to be measured at fair value with changes recognized in net income. Our significant accounting policies are described in Note 2 to the condensed consolidated financial statements included in this Quarterly Report and in the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. Key Components of our Results of Operations Revenues We generate the substantial majority of 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. Following the adoption of our Digital Asset Treasury (“DAT”) strategy in September 2025, the Company does not expect to generate revenue from digital asset activities. Cost of Revenues Cost of revenues includes the cost of purchased inventory, materials and supplies, internal labor and related benefits, subcontractor costs, depreciation, overhead, and shipping and handling costs. These costs are directly associated with our Forever 8 inventory management activities. We no longer incur costs related to the purchase or resale of Bitcoin mining equipment, as this line of business is no longer pursued. Selling, General and Administrative Expenses Selling, general and administrative expenses include selling and marketing costs, payroll and employee-related expenses, administrative expenses, professional fees, insurance, technology and software costs, 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. Restructuring and Severance Expenses Restructuring and severance expenses consist of costs associated with organizational changes, including employee severance, benefits continuation, contract termination costs, and costs associated with facility consolidations or other restructuring activities. These expenses vary depending on management’s strategic initiatives. Interest Expense and Income, Net Interest expense reflects the cost of borrowings under our lines of credit and other financing arrangements used to support our Forever 8 inventory-financing activities. Interest income primarily includes earned interest on notes receivable and cash-equivalent investments, as well as yield earned on short-term instruments. 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. Changes in the fair value of digital assets including both realized and unrealized gains and losses are recognized in earnings in the period in which they occur. Because the DAT is not a revenue-generating activity, changes in fair value represent a key driver of period-over-period volatility in our results of operations. Gain on Divestiture Gain on divestiture represents gains recognized in connection with the sale of assets. This includes 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. 29 Other Income Other income includes the interest income received from the Wattum Note and Reichard Containers Note. Results of Operations Three Months Ended June 30, 2026 versus Three Months Ended June 30, 2025 The following table sets forth information comparing the components of net (loss) income from continuing operations for the three months ended June 30, 2026 and 2025: Three Months Ended June 30, Period over Period Change 2026 2025 $ % Revenues, net $ 2,068,430 $ 7,578,646 $ (5,510,216 ) -72.7 % Cost of revenues 1,968,184 6,333,350 (4,365,166 ) -68.9 % Gross profit 100,246 1,245,296 (1,145,050 ) -92.0 % Operating expenses: Selling, general and administrative 6,698,406 2,451,832 4,246,574 173.2 % Impairments 5,211,824 - 5,211,824 100.0 % Operating loss (11,809,984 ) (1,206,536 ) (10,603,448 ) -878.8 % Other (expense) income: Interest income (expense) (352,582 ) (1,276,726 ) 924,144 72.4 % Gain on divestiture - 1,231,774 (1,231,774 ) -100.0 % Gain on extinguishment of liabilities - - - 0.0 % Change in fair value of digital assets 29,324,737 - 29,324,737 100.0 % Change in fair value of short-term investments 17,647 - 17,647 100.0 % Other income 521,307 81,969 439,338 536.0 % Total other income (expense), net 29,511,109 37,017 29,474,092 79,623.1 % Income (loss) before income taxes 17,701,125 (1,169,519 ) 18,870,644 1,613.5 % Income tax expense (benefit) - - - 0.00 % Net income (loss) from continuing operations 17,701,125 (1,169,519 ) 18,870,644 1,613.5 % Net income (loss) from discontinued operations - - - 0.0 % Net income (loss) $ 17,701,125 (1,169,519 ) 18,870,644 1,613.5 % Revenue For the three months ended June 30, 2026, revenues were $2,068,430, representing a decrease of $5,510,216, or 72.7%, compared to revenues of $7,578,646 for the three months ended June 30, 2025. The decrease was primarily attributable to a significant reduction in orders from the Company’s largest customer, which experienced a deterioration in its financial condition during the second quarter of 2026 as further described in Note 7, and to the Company’s continued strategic transition away from the Forever 8 online retail and liquidation-model business. Cost of Revenues Cost of revenues was $1,968,184 for the three months ended June 30, 2026, compared to $6,333,350 for the three months ended June 30, 2025, a decrease of $4,365,166, or 68.9%. The decrease correlates to the reduction in revenue volumes described above. 30 Gross Profit Gross profit decreased to $100,246 for the three months ended June 30, 2026, compared to gross profit of $1,245,296 for the three months ended June 30, 2025, a decline of $1,145,050, or 92.0%. Gross margin declined to 4.8% from 16.4% in the prior-year period. The decrease was driven primarily by the reduction in revenues and unfavorable product mix during the transition away from the online retail and liquidation-model operations. Operating Expenses Selling, general and administrative (“SG&A”) expenses were $6,698,406 for the three months ended June 30, 2026, compared to $2,451,832 for the three months ended June 30, 2025, an increase of $4,246,574, or 173.2%. The increase was attributable to: ● Bad debt expense of $1,836,366 recognized during the three and six months ended June 30, 2026 in respect of receivables from the Company’s largest customer, whose financial condition deteriorated during the period. ● Higher professional fees and advisory costs incurred in connection with the Company’s capital raising and the ongoing implementation of its Digital Asset Treasury strategy; ● Increased compensation and corporate overhead required to support expanded operations, including share-based compensation; 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 three and six months ended June 30, 2026 relating to a receivable arising from the disposition of inventory by the Company’s largest customer without the Company’s authorization (see Note 7 — Accounts Receivable). There were no comparable impairment charges in the prior-year period. Interest Expense Net interest expense totaled $(352,582) for the three months ended June 30, 2026, compared to $(1,276,726) for the three months ended June 30, 2025, a decrease of $924,144, or 72.4%, reflecting lower average borrowings on the Company’s financing facilities. Gain on divestiture The Company recognized no gain on divestiture for the three months ended June 30, 2026, compared to a gain of $1,231,774 for the three months ended June 30, 2025 related to the sale of the Ferguson Containers corrugated packaging business completed on April 7, 2025. Change in Fair Value of Digital Assets The Company recognized a gain of $29,324,737 related to fair value changes of its digital asset holdings during the three months ended June 30, 2026, reflecting recovery in the market prices of Worldcoin (WLD) and Ethereum (ETH) during the quarter. The Company did not hold digital assets during the comparable 2025 period. Change in Fair Value of Short-Term Investments The Company recognized a gain of $17,647 related to fair value changes in its short-term investments during the six months ended June 30, 2026. There were no comparable amounts in the prior-year period. Other Income Other income increased to $521,307 for the three months ended June 30, 2026, from $81,969 in the prior-year period, an increase of $439,338, primarily due to interest earned on the Reichard Corrugated Note and other miscellaneous items. Income tax expense Income tax expense was $0 for the three months ended June 30, 2026, compared to $0 for the three months ended June 30, 2025. The Company continues to maintain a full valuation allowance on its net deferred tax assets. Net income (loss) Net income was $17,701,125 for the three months ended June 30, 2026, compared to a net loss of $(1,169,519) for the three months ended June 30, 2025. Six Months Ended June 30, 2026 versus Six Months Ended June 30, 2025 The following table sets forth information comparing the components of net (loss) income from continuing operations for the six months ended June 30, 2026 and 2025: Six Months Ended June 30, Period over Period Change 2026 2025 $ % Revenues, net $ 9,630,395 $ 17,492,633 $ (7,862,238 ) -44.9 % Cost of revenues 9,314,888 15,434,078 (6,119,190 ) -39.6 % Gross profit 315,507 2,058,555 (1,743,048 ) -84.7 % Operating expenses: Selling, general and administrative 17,426,952 4,681,257 12,745,695 272.3 % Impairments 5,211,824 - 5,211,824 100.0 % Total operating expenses 22,638,776 4,681,257 17,957,519 383.6 % Operating loss (22,323,269 ) (2,622,702 ) (19,700,567 ) -751.2 % Other (expense) income: Interest income (expense) (629,300 ) (2,565,530 ) 1,936,230 75.5 % 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 (37,177,137 ) - (37,177,137 ) -100.0 % Change in fair value of short-term investments 23,666 - 23,666 100.0 % Other income 801,261 103,867 697,394 671.4 % Total other income (expense), net (36,111,510 ) (1,229,889 ) (34,881,621 ) -2,836.2 % Income (loss) before income taxes (58,434,779 ) (3,852,591 ) (54,582,188 ) -1,416.8 % Income tax expense (benefit) - (28,793 ) 28,793 100.0 % Net income (loss) from continuing operations (58,434,779 ) (3,823,798 ) (54,610,981 ) -1,428.2 % Net income (loss) from discontinued operations - 105,553 (105,553 ) -100.0 % Net income (loss) $ (58,434,779 ) $ (3,718,245 ) $ (54,716,534 ) -1,471.6 % Revenue For the six months ended June 30, 2026, revenues were $9,630,395, representing a decrease of $7,862,238, or 44.9%, compared to revenues of $17,492,633 for the six months ended June 30, 2025. The decrease was primarily attributable to a significant reduction in orders from the Company’s largest customer, which experienced a deterioration in its financial condition during the second quarter of 2026 as further described in Note 7, and to the Company’s continued strategic transition away from the Forever 8 online retail and liquidation-model business. For the three and six months ended June 30, 2026, the Company’s Forever 8 subsidiary derived approximately 99% of its revenue from a single customer, as disclosed in Note 3. As described in Note 7, this customer experienced a significant deterioration in its financial condition during the second quarter of 2026, and the Company can provide no assurance that ordering activity from this customer will continue at prior levels, or at all. The Company intends to sell its remaining inventory to new customers as opportunities arise and is exploring opportunities with respect to the Forever 8 business. There can be no assurance as to the outcome or timing of any such efforts, and revenues from the Forever 8 business in future periods may be materially reduced or eliminated. Cost of Revenues Cost of revenues was $9,314,888 for the six months ended June 30, 2026, compared to $15,434,078 for the six months ended June 30, 2025, a decrease of $6,119,190, or 39.6%, correlating to the reduction in revenue volumes. 31 Gross Profit Gross profit decreased to $315,507 for the six months ended June 30, 2026, compared to gross profit of $2,058,555 for the six months ended June 30, 2025, a decline of $1,743,048, or 84.7%. Gross margin declined to 3.3% from 11.8% in the prior-year period. The decrease was driven primarily by the reduction in revenues and unfavorable product mix during the transition away from the online retail and liquidation-model operations. Operating Expenses SG&A expenses were $17,426,952 for the six months ended June 30, 2026, compared to $4,681,257 for the six months ended June 30, 2025, an increase of $12,745,695, or 272.3%, driven by the factors described in the three-month discussion above. The increase was attributable to: ● Bad debt expense of $1,836,366 recognized during the three and six months ended June 30, 2026 in respect of receivables from the Company’s largest customer, whose financial condition deteriorated during the period. ● Impairment charges of $5,211,824 were recognized in the second quarter of 2026 and are further described above. There were no impairment charges in the comparable 2025 period. ● Higher professional fees and advisory costs incurred in connection with the Company’s capital raising and the ongoing implementation of its Digital Asset Treasury strategy; ● Increased compensation and corporate overhead required to support expanded operations, including share-based compensation; and ● Higher technology, compliance, and custodial-related costs associated with digital asset oversight. Interest Expense Net interest expense totaled $(629,300) for the six months ended June 30, 2026, compared to $(2,565,530) for the six months ended June 30, 2025, a decrease of $1,936,230, or 75.5%, reflecting lower average borrowings under the Forever 8 Facilities. Gain on Extinguishment of Liabilities The Company recognized a gain on extinguishment of liabilities of $870,000 during the six months ended June 30, 2026, related to the fulfillment of settlement agreements for past rents and severances during the first quarter of 2026. There was no comparable activity in the six months ended June 30, 2025. Change in Fair Value of Digital Assets The Company recognized a net loss of $(37,177,137) related to fair value changes of its digital asset holdings during the six months ended June 30, 2026, reflecting a $(66,501,874) loss during the first quarter of 2026 partially offset by a $29,324,737 recovery during the second quarter of 2026. The Company did not hold digital assets during the six months ended June 30, 2025. Change in Fair Value of Short-Term Investments The Company recognized a gain of $23,666 related to fair value changes in its short-term investments during the six months ended June 30, 2026. There were no comparable amounts in the prior-year period. Other Income Other income increased to $801,261 for the six months ended June 30, 2026, from $103,867 in the prior-year period, an increase of $697,394. Income (Loss) Before Income Taxes Net loss before income taxes was $(58,434,779) for the six months ended June 30, 2026, compared to $(3,852,591) for the six months ended June 30, 2025. The increased loss is primarily attributable to the net $(37,177,137) unrealized loss on digital assets recognized during the six-month period, higher SG&A expenses supporting the Digital Asset Treasury strategy, and the $5,211,824 impairment charge, partially offset by the $870,000 gain on extinguishment of liabilities and lower net interest expense. Income tax expense Income tax expense was $0 for the six months ended June 30, 2026, compared to an income tax benefit of $(28,793) for the six months ended June 30, 2025. The Company continues to maintain a full valuation allowance on its net deferred tax assets. Net income (loss) Net loss from continuing operations was $(58,434,779) for the six months ended June 30, 2026, compared to $(3,823,798) for the six months ended June 30, 2025. Net income from discontinued operations was $0 for the six months ended June 30, 2026, compared to $105,553 for the six months ended June 30, 2025. Total net loss was $(58,434,779) for the six months ended June 30, 2026, compared to $(3,718,245) for the six months ended June 30, 2025. Liquidity and Capital Resources Overview Eightco Holdings Inc. funds its operations through a combination of equity and debt financing, including proceeds from its At-The-Market (“ATM”) offering program, private placement transactions, and borrowings under its line of credit facility. These proceeds were deployed primarily into the Company’s Digital Asset Treasury and strategic investments. As of June 30, 2026, the Company had cash and cash equivalents of $11,003,483, compared to $58,501,108 as of December 31, 2025. In addition to cash, the Company held short-term investments of $50,927,699 and digital assets at fair value of $228,011,086 as of June 30, 2026. Total assets were $407,492,768 at June 30, 2026, compared to $250,193,124 at December 31, 2025, and total liabilities were $13,418,142 at June 30, 2026, compared to $17,975,088 at December 31, 2025, resulting in total stockholders’ equity of $394,074,626 at June 30, 2026, compared to $232,218,036 at December 31, 2025. Outstanding debt as of June 30, 2026 consisted of $8,075,000 under the Company’s lines of credit and $400,000 under lines of credit with related parties, for total outstanding lines of credit of $8,475,000. 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 currently unsecured. 32 The sale of the Ferguson Containers corrugated packaging business was completed on April 7, 2025. The Company received $557,835 in cash proceeds at closing plus a $2.5 million seller note receivable, and the buyer assumed certain liabilities. The divestiture generated a gain of $1,231,774 and eliminated the operating overhead associated with that business segment. Liquidity Profile As of June 30, 2026, our liquidity resources consisted of $11.0 million of cash and cash equivalents, $50.9 million of short-term investments (consisting of U.S. government securities and money market funds), and approximately $86.9 million of U.S. dollar-denominated stablecoins, for total near-cash liquidity of approximately $148.8 million. We also held approximately $141.1 million of other digital assets (primarily 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 six months ended June 30, 2026, we used $9.7 million of cash in operating activities, or approximately $1.6 million per month. Substantially all of our reported $(57.9) million net loss for the six-month period consisted of non-cash items, including a net $(37.2) million unrealized loss on digital assets, $5.5 million of non-cash share-based compensation, and the $5.2 million impairment charge. 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 equity offering program or monetization of our other digital asset and strategic investment holdings. Sources of Liquidity ATM Program During the six months ended June 30, 2026, the Company raised net proceeds of $218.1 million under its ATM program. Proceeds were used to acquire digital assets, fund strategic private company investments, and support working capital needs. Forever 8 Credit Facilities (Series A, B, C, and D) Forever 8 continues to rely on its secured inventory financing facilities (the “Forever 8 Facilities”), which remain active. As of June 30, 2026, we had approximately $9.1 million outstanding and unused availability of approximately $2.0 million under the Forever 8 Facilities, subject to borrowing base and other conditions. In the aggregate, these facilities provide: ● Interest rates ranging from 15% to 18% per annum ● Unused commitment fees of approximately 5% per annum ● A revolving draw structure through “Initial Loan Advances” and “Subsequent Draws” from lender-controlled escrows ● Collateral in the form of Forever 8 inventory, equipment, and related proceeds As of June 30, 2026, Forever 8 had approximately $9.1 million outstanding under these facilities to support ongoing inventory purchases. 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. As of June 30, 2026, we held digital assets at fair value of approximately $228.0 million, consisting primarily of Worldcoin (WLD), Ethereum (ETH), and U.S. dollar-denominated stablecoins. These 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 March 2026, we invested $92.6 million in indirect beneficial interests in OpenAI preferred stock. We also invested approximately $18 million in Beast Industries, the business platform of content creator MrBeast. An additional $7 million capital commitment was callable through May 9, 2026, at which point the call period expired without being exercised. Additionally, in October 2025, we invested approximately $1 million in Series D Preferred Stock of Mythical, Inc., a developer of blockchain-based video game ecosystems. As of June 30, 2026, total strategic private company investments were $111.6 million. Forever 8 Inventory Funding Forever 8 uses liquidity to support inventory purchasing activities on behalf of e-commerce merchants. These requirements are funded through: ● Operating cash flows ● Digital asset conversions ● Borrowings under the Forever 8 Facilities Operating and Corporate Needs Liquidity is also used to support routine corporate expenses, personnel, professional fees, vendor obligations, and other working capital needs. Digital Asset Volatility During the six months ended June 30, 2026, we recognized a net loss of approximately $(37.2) million related to changes in the fair value of digital assets, consisting of a $(66.5) million loss during the first quarter of 2026 partially offset by a $29.3 million gain during the second quarter of 2026. Such fair value changes materially affect reported results and may impact future liquidity planning given digital asset price volatility. A sustained decline in the price of WLD or ETH would reduce the realizable value of our digital asset holdings and would limit the total liquidity available from our digital asset portfolio. We continue to monitor digital asset market conditions and may adjust our treasury strategy as appropriate. 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 impacting e-commerce demand Based on current assumptions and our existing near-cash liquidity of approximately $115.6 million, our other digital asset and strategic equity investment holdings, our continued access to capital through our at-the-market equity offering program, and our currently anticipated operating cash use of approximately $1.6 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. 33 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 Six Months Ended June 30, 2026 2025 Cash (used in) provided by: Operating Activities $ (9,697,765 ) $ 340,614 Investing Activities (250,506,400 ) 397,759 Financing Activities 212,706,540 (281,308 ) Net increase (decrease) in cash and restricted cash $ (47,497,625 ) $ 457,065 Cash Flows for the Six Months Ended June 30, 2026 and 2025 Operating Activities Net cash used in operating activities was $(9,697,765) during the six months ended June 30, 2026, which consisted primarily of the net loss of $(58,434,779), offset by non-cash items including the change in fair value of digital assets of $37,177,137, share-based compensation of $5,498,007, the impairment charge of $5,211,824, reserve for bad debts of $1,836,366, depreciation and amortization of $5,061, and a gain on disposal of $(231,501). Changes in operating assets and liabilities used cash of $(759,880), primarily reflecting a decrease in accrued expenses and other current liabilities of $(1,211,595), an increase in accounts receivable of $(1,503,807), and a decrease in accounts payable of $(1,080,351), partially offset by decreases in inventory of $1,920,098 and prepaid expenses and other current assets of $1,115,775. Net cash provided by operating activities was $340,614 during the six months ended June 30, 2025, which consisted primarily of the net loss of $(3,718,245), offset by non-cash items including depreciation and amortization of $1,187,373, amortization of debt issuance costs of $500,000, and share-based compensation of $143,201, partially offset by the gain on sale of assets of $(1,231,774). Changes in operating assets and liabilities provided cash of $3,426,059, primarily reflecting decreases in inventory of $2,094,868 and accounts receivable of $504,904 and an increase in accrued expenses and other current liabilities of $574,478. Investing Activities Net cash used in investing activities was $(250,506,400) during the six months ended June 30, 2026, compared to net cash provided by investing activities of $397,759 for the six months ended June 30, 2025. The change is largely attributable to purchases of short-term investments of $(363,627,127), purchases of other investments of $(111,599,951), and purchases of digital assets of $(89,286,578) in connection with the implementation and continued execution of the Company’s Digital Asset Treasury strategy, partially offset by proceeds from the sale of short-term investments of $312,930,999 and repayments of principal under loans held-for-investment of $76,258. Financing Activities Net cash provided by financing activities was $212,706,540 during the six months ended June 30, 2026, compared to net cash used in financing activities of $(281,308) for the six months ended June 30, 2025. The change was largely attributable to net proceeds from the issuance of common stock of $215,971,540 generated through the Company’s ATM program, partially offset by net repayments under lines of credit of $(2,265,000) and prepayment for share repurchase option of $(1,000,000). During the six months ended June 30, 2026, the Company had an unfunded capital commitment of approximately $7 million to Beast Industries, which was committed for a period of 60 days following the Company’s initial investment. While not a variable interest or structured entity, this commitment represented a contractual obligation that, if called, would have had an impact on liquidity. The applicable period of the commitment expired on May 9, 2026 without being exercised. 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 impacting our ability to raise additional equity via PIPE or ATM transactions; ● Interest rate levels influencing borrowing costs under the Forever 8 Facilities and customer demand for inventory financing; and ● Macro factors (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 June 30, 2026: Unfunded Capital Commitment. As of June 30, 2026, we had an unfunded capital commitment of approximately $7 million to Beast Industries, which was able to be called within 60 days of our initial investment and expired on May 9, 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 $2.5 million to $3.5 million over the next 12 months. Credit Facility Interest and Fees. Based on current borrowing levels and interest rates ranging from 12% to 18%, we expect interest expense and commitment fees under our credit facilities of approximately $1.2 million to $1.5 million over the next 12 months. 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 combined 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. 34 ITEM