This business model is so genius that it's a wonder it hasn't been implemented years ago. It's facilitated by Forever 8 Fund LLC, a wholly-owned subsidiary of Eightco Holdings, Inc. (NASDAQ: OCTO), and is so powerful that according to recently published financials, it generated revenues of over $75 million last year. On a comparative basis, that's an over 137% surge over its 2022 total. That's certainly impressive for any microcap company, but considering that as of April 1, 2024, OCTO has only 8,537,310 shares of common stock outstanding, corresponding to a market capitalization of just $6.73 million, it's the kind of results that can send shares appreciably higher.
That's been the case since the report, with shares adding 7% to an already bullish run to $0.76 at the time of writing on Tuesday. Still, despite the increase, factoring OCTO assets, deals made, and the groundwork completed to accelerate growth by capitalizing on unique market opportunities, the disconnect between those strengths and the current share price may be too compelling to ignore. More directly, consider seizing the opportunity while the value window is open. Admittedly, some history has made even the most bullish investors skeptical of the lofty revenue guidance. But know this: OCTO did more than deliver; they exceeded. And that's not all. In its update, the company noted significant changes to leadership, including naming Paul N. Vassilakos as the company's Executive Chairman and Chief Executive Officer, replacing Kevin O'Donnell, who served as the Company's Executive Chairman since October 2021 and Interim Chief Executive Officer since February. Mr. Vassilakos, who co-founded Forever 8 Fund, LLC, OCTO's largest subsidiary, is the ideal choice to lead the company going forward, recognizing his consumer market expertise, financial savvy, and ability to make small companies much larger. That's been his history.
Throughout his career, he's held Board, CEO, and CFO positions in various publicly listed companies. Additionally, Mr. Vassilakos founded Petrina Advisors, Inc., a privately held advisory firm providing investment banking advisory services for public and privately held companies to help them grow and list on national exchanges. In other words, he is a complete package regarding managing and capital considerations. And under his stewardship, investors should expect the milestones reached to become growth catalysts sooner than later.
Capitalizing On Massive Investment And Market Opportunities
In fact, by eliminating much of the legacy debt and cloud of dilutive uncertainty, OCTO's growth pace is shifting from hyper-speed to warp, this time rewarding investors, not financiers. Fueling that move, in March, OCTO strengthened its balance sheet significantly after former owners of Forever 8, including Mr. Vassilakos, agreed to amend the aggregate $27.5 million principal amount of notes received as consideration in the October 2022 sale of Forever 8 to OCTO, including canceling an aggregate of approximately $3.0 million in accrued interest and converting roughly $1.1 million of accrued interest into 1.4 million shares of OCTO common stock. The update also said former Forever 8 owners agreed to defer interest and any payments due on the notes until October 30, 2024. That's not all.
OCTO announced making its final repayment ahead of schedule under the Prepayment and Redemption Agreement, dated October 23, 2023, fulfilling obligations related to a Senior Secured Convertible Note issued in March 2023. The payment does two immediate things: it lowers debt levels and, importantly, gives OCTO a much cleaner capital structure to be able to attract efficient capital to grow Forever 8 Fund, LLC.
Perhaps most accurately said, OCTO is better positioned than at any time in its history to create sustainable near- and long-term shareholder value. And with an economic climate conducive to benefiting its business model and a robust supply chain of high-demand products, like the Apple iPhone (NASDAQ: AAPL), significant revenue growth and forecast beats like the one just announced could become the norm, not the exception.
That's certainly the opinion of Carl Margetts, Co-Founder of Forever 8. He was featured on the OAN channel explaining why a challenging interest rate environment coupled with supply chain disruptions may actually contribute to his company's growth rather than diminish it. In particular, he points out that Forever 8 is facilitating bringing items to consumers, like the iPhone, at price points they can afford. And that's just one product. Forever 8 is uniquely positioned to capitalize on rev-gen opportunities from a long list of consumer items and, as importantly, at price points within reach of millions of consumers.
A Value Proposition Based On Tangibles
Keep in mind that OCTO is tapping into a massive market opportunity by providing inventory capital solutions for eCommerce vendors well beyond the refurbished cell phone and electronics market. That's excellent news for buyers, but is also of great value to the eCommerce vendors, providing them with an efficient source of inventory capital in a market where traditional capital providers are not very active. Now, don't be misled by the get-rich-quick videos posted to social media about how easy it is to become an Amazon (NASDAQ: AMZN) or eBay (NASDAQ: EBAY) seller. If it was so easy, the publishers wouldn't bother making those videos because they'd be too busy counting their money.
In the real world of online sellers, meaning those doing it as a living rather than a one-off sale, the work and money required to build a successful brand can be daunting. Launching a brand takes inventory management, vendor sourcing and compliance, significant marketing costs, constant platform updates, and considerable upfront cash. Things don't get any easier from there.
Sellers often need to pay for inventory before shipping, mostly from overseas, which adds significant risk and uncertainty to a frequently underfunded online business owner. However, the worries don't stop after the first pallets of merchandise are secured; successful vendors must also maintain their inventory. Otherwise, they face the prospect of losing considerable online ranking support from the online platforms listing their products. More specifically, high-ranking sellers that sell out of inventory quickly become low-ranking sellers, and it's an equally challenging battle to regain that top billing once it's lost. That can be an unrelenting and cash-flow-draining effort, noting popular vendors often need to reorder inventory with ninety-day lead times or more, which can turn profits into expenses and create substantial cash-flow issues.
Remember, smart businesspeople pay themselves first. So, when replenishing inventory takes ninety days or more and needs to be paid in full before products get shipped, that income is pushed back in the traditional sense. That can create many problems for sellers, with becoming disgruntled among the largest.
Changing the Online Seller's Dynamic
However, as noted, there's a new way for online sellers to make more money and grow a more significant online presence than they ever imagined - and it could be the best win-win proposition going. Best of all, it's easy to participate and, in many cases, alleviates the seller's financial and inventory management concerns. The quick overview is this: Forever 8 buys a seller's inventory at cost, immediately freeing up capital for the eCommerce seller, and then commits to fund all future inventory purchases directly from the supplier that are required to maintain top-tier platform compliance, with the online seller typically paying Forever 8 a 10% markup on supplier cost on each sale.
For instance, if a seller markets a widget on Amazon that has a supplier cost of $10 and that seller has 10,000 units in inventory, Forever 8 would initially buy up to 70% of them (typically focusing on the fastest-selling products only, minimizing Forever 8’s risk), sending that seller $80,000. Then, when that seller sells a widget for $30, Forever 8 will invoice $11, and the seller will keep the difference. As the seller then runs low on stock, Forever 8 steps in and funds future inventory purchases directly from the supplier, ensuring the seller's items remain in stock but without having the working capital burdens of funding that inventory upfront.
Here's the best part of the relationship: Forever 8 isn't loaning money; it's buying inventory directly and allowing the seller to grow its business without worrying about inventory management or having the funds to reorder. Forever 8 handles that burden instead, securing its own interest through inventory ownership, and it does all this without disrupting the seller's normal operations or logistics. If the seller defaults on a payment, Forever 8 can liquidate the inventory it owns without having to enforce against the seller directly and avoid any messy bankruptcy proceedings; that's the benefit of it not being a loan!
Further, under these circumstances, given that Forever 8 has purchased the inventory at supplier cost, it will most often be able to liquidate any inventory it owns at a price above the $11 it would have received from the seller anyway and can actually make more money if this happens. However, that's a final resort and less likely to play out than the original plan, which can make both parties a lot of money while streamlining operations.
Remember, Forever 8 and sellers want and need each other to earn as large a share as possible of the estimated $4.3 trillion online sales market.
Earning a Share of a Massive Market Opportunity
For sellers, brands, and itself, Forever 8 can make that happen. Its program has attracted significant interest, with Forever 8 already signing at least 35 sellers. Even better, its proprietary business model is scalable, assumes the product risk, does not require its customers (the eCommerce sellers) to provide personal guarantees, enforces no fixed repayment plan on the sellers, and no equity dilution is attached to the seller's business. Those terms are more than brand-friendly; they're unrivaled in any financing agreement. The terms get better.
Forever 8 provides capital through a non-recourse agreement since its investment is collateralized with its owned inventory. Remember, Forever 8 isn't a lender - it buys and sells products it legally owns. Because it takes control of the inventory, foreclosing is never necessary. Moreover, if the seller has personal issues, like bankruptcy, Forever 8 is insulated from those proceedings by owning the inventory outright. From an investor's perspective, the business model supports substantial and unimpeded growth potential.
Not only does this allow Forever 8’s customers to be more profitable, but because it agrees to maintain specific inventory levels and enhance sales and growth, the enhanced revenue streams can be supported long-term. Thus, the more sellers on board, the greater the daily revenues. Partners get billed bi-weekly or monthly and benefit from the Forever 8 platform that supports the sales and management processes from start to end. They also should like the fact that the Forever 8 commitment is uncapped. If the seller sells more, Forever 8 will continue replenishing the inventory levels needed to grow and maintain a high ranking on selling platforms. The best news is that the program is available to the online-selling masses.
Forever 8 Program Is for the Online Selling Masses
Forever 8 is looking to partner with more than just mega-brands. Its ideal client candidate sells products on Amazon, Shopify (NYSE: SHOP), or other eCommerce platforms, generates sales of $5k to $100k per SKU per month, has at least three months of sales history, and can turn inventory in 120 days or less. If they check those boxes, Forever 8 can be the ideal partner to fund inventory and free up capital for the sellers to fund advertising, add new SKUs, and grow their business.
Partnering is easy. OCTO completes due diligence on the sales history and confirms supplier terms and costs. Once those are filed and a seller is approved, an inventory management agreement is signed, and the seller is paid for a portion of its on-hand inventory and connected to the Forever 8 platform. From there, when inventory drops below the minimum level required to confidently fill future orders, Forver8 steps in. It purchases additional inventory directly from the seller's supplier, and the goods are shipped in the usual fashion. Forever 8 then uses its proprietary platform to track sales and invoices the seller for goods sold on a bi-weekly or monthly basis; it's as easy as that.
Sellers appreciate the online application, quick decision, no meetings or long-winded pitches, and an offer that is real and quickly delivered after agreement. Moreover, the agreements align entirely with both interests. The Forever 8 solution is not a loan; they only get paid when the seller sells a product, there are no fixed repayment schedules, and if additional inventory is needed, it's done quickly without waiting for financing pre-approvals.
The Forever 8 value doesn't end there. As a partner, they use their expertise to optimize listing pages, review and streamline sales channel strategies, and create efficient inventory management strategies.
Forever 8 Protects Its and Investor's Interests
Still, as attractive as the program is to online brands and sellers, it also exposes a compelling investment proposition in a sub-dollar company with $100 million in sales as a target in its crosshairs. Keep in mind that OCTO isn't providing charity; it's investing. They complete substantial due diligence, own the inventory to protect against losses, and protect most of that inventory through independent 3PL warehouses.
Couple that with new leadership, eliminating convertible debt facilities, and an aggressive campaign to sign up brand partners; the disconnect between assets, revenues, potential, and share price may be too vast to ignore. Thus, with an evidence-based case proving that this company has the means and leadership to grow quickly, the best consideration may be to take advantage of a valuation disconnect while you can.
Disclaimers: This is sponsored content. Hawk Point Media Group, Llc. (HPM) has been compensated three-thousand-dollars by CBOE Global Partners LLC to produce and distribute digital content for Eightco Holdings, Inc. It should be expressly understood that HPM Llc. is not operated by a licensed broker, a dealer, or a registered investment adviser. It should also be expressly understood that under no circumstances does any information published herein represent a recommendation to buy or sell a security. HPM reports/releases are commercial advertisements and are for general information purposes ONLY. The information made available by Hawk Point Media Group, Llc. is not intended to be, nor does it constitute, investment advice or recommendations. The contributors do NOT buy and sell securities covered before or after any particular article, report and/or publication. HPM holds ZERO shares and has never owned stock in Eightco Holdings, Inc. While HPM Llc. does not own or market shares, it is prudent to expect that those hiring HPM, Llc, including that company’s owners, employees, and affiliates, may sell some or even all of the Eightco Holdings, Inc. shares that they own, if any, during and/or after this engagement period. Always do your own due diligence prior to investing in any publicly traded company.
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