Eightco Holdings Inc. (NASDAQ:OCTO), a short-term business credit institution, has announced a change in its independent registered public accounting firm, as detailed in a recent 8-K filing with the Securities and Exchange Commission. On September 30, 2024, Morison Cogen LLP resigned from its role as the independent auditor for Eightco Holdings. The resignation came as Morison Cogen ceased providing audit services to publicly traded companies. The company’s Audit Committee approved this change.
Morison Cogen’s departure was also marked by the transition of the audit partner and manager responsible for Eightco Holdings’ audit to Stephano Slack LLC, which has since been engaged as the new auditor for Eightco Holdings. This engagement was effective as of October 4, 2024, following approval from the company’s Board of Directors.
The reports on Eightco Holdings’ financial statements for the fiscal years ending December 31, 2023, and December 31, 2022, by Morison Cogen did not contain any adverse opinion or disclaimer of opinion. However, the reports included a statement expressing substantial doubt about the company’s ability to continue as a going concern due to its losses and negative cash flows from operations.
Throughout the fiscal years of 2023 and 2022, and the subsequent interim period leading up to September 30, 2024, there were no disagreements between Eightco Holdings and Morison Cogen on matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure that would have required mention in their reports. Additionally, there were no reportable events as defined by SEC regulation.
In other recent news, Eightco Holdings Inc. has reported a series of significant developments. The company recently amended its at-the-market offering, raising the aggregate amount from $2 million to $2.75 million, a move formalized with the Securities and Exchange Commission. Eightco Holdings also reported a marked improvement in its financial health, eliminating $5.4 million in convertible notes, boosting shareholder equity by $23 million, and cancelling nearly 5.9 million shares from warrants and convertible securities.
The company also successfully regained compliance with two NASDAQ requirements, maintaining a closing bid price above $1.00 for 20 consecutive trading days and reporting stockholders’ equity surpassing NASDAQ’s minimum requirement. This was followed by a 1-for-5 reverse stock split, reducing the number of outstanding shares from approximately 8.9 million to around 1.75 million.
These recent developments also include a gross profit margin increase of 22%, up from 12% in the previous year, and a reduction in Selling, General, and Administrative expenses by 23% to $6.9 million. Eightco Holdings is currently exploring strategic acquisitions to enhance its technology solutions for the e-commerce ecosystem, with a focus on expanding its main operating subsidiary, Forever 8 Fund LLC. The company aims to secure additional non-dilutive senior debt financing to replenish the capital used to repay the convertible notes, targeting $100 million in revenues and positive EBITDA in 2025.
InvestingPro Insights
Recent financial data from InvestingPro sheds light on Eightco Holdings Inc.’s (NASDAQ:OCTO) current financial position, providing context to the auditor change and the going concern statement mentioned in the article. The company’s market capitalization stands at a modest $4.08 million, reflecting its small-cap status.
InvestingPro Tips highlight that Eightco is “operating with a significant debt burden” and is “quickly burning through cash,” which aligns with the auditor’s concerns about the company’s ability to continue as a going concern. Additionally, the tip that “short-term obligations exceed liquid assets” further underscores the financial challenges faced by the company.
The company’s Price to Book ratio of 0.29 suggests that the stock is trading below its book value, which could be interpreted as the market’s skepticism about the company’s future prospects. This is reinforced by the InvestingPro Tip indicating that the stock “has taken a big hit over the last six months,” with data showing a 46.74% price decline in that period.
Despite these challenges, it’s worth noting that Eightco has seen a “strong return over the last month,” with a 34.71% price increase. This recent uptick could potentially reflect market reactions to changes such as the new auditor appointment.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Eightco Holdings, providing a deeper dive into the company’s financial health and market performance.
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