STOCKHOLDERS’ EQUITY |
3 Months Ended |
|---|---|
Mar. 31, 2025 | |
| Equity [Abstract] | |
| STOCKHOLDERS’ EQUITY | Note 12 STOCKHOLDERS’ EQUITY
Authorized Capital
The Company’s authorized shares of all capital stock, par value $ per share, of shares, consisting of (i) shares of preferred stock and (ii) shares of Class A Common Stock.
Preferred Stock
The Amended and Restated Certificate of Incorporation authorizes the Company to issue shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of March 31, 2025, the Company had outstanding shares of preferred stock consisting of shares of its Series A Preferred Stock, shares of its Series B Preferred Stock, shares of its Series C Cumulative Convertible Redeemable Preferred Stock (the “Series C Preferred Stock”) and shares of its Series D Preferred Stock The Company’s outstanding shares of preferred stock do not contain mandatory redemption or other features that would require them to be presented on the balance sheet outside of equity and, therefore, they qualify for equity accounting treatment. See Note 16 Subsequent Events.
Conversions of Series A Preferred Stock
No shares of Series A Preferred Stock were issued during the three months ended March 31, 2025. During the three months ended March 31, 2025, the Company issued shares of its Class A Common Stock to institutional investors upon conversions of shares of their Series A Preferred Stock with stated values totaling $308,000.
During the three months ended March 31, 2025, the Company recorded $279,395 of undeclared dividends on its Series A Preferred Stock and the total accumulated undeclared dividends were $360,404 as of March 31, 2025. The total stated value and the undeclared dividends of the Series A Preferred Stock at March 31, 2025, of $22.6 million, were convertible into approximately 8.7 million shares of the Company’s Class A Common Stock at an assumed conversion price of $2.60 per share.
Series A Preferred Stock Designation
On October 16, 2024, the Company’s board of directors approved the designation of shares of Series A Preferred Stock. Each share of Series A Preferred Stock shall have a par value of $ per share and a stated value equal to $ per share. Terms of the Series A Preferred Stock include: (i) dividends at 5% per annum, (ii) voting rights, which include voting as one class with the common stockholders and the holder shall be entitled to cast the number of votes determined by dividing the stated value per share by the higher of $ or the VWAP of the trading day immediately before the record date for the vote, and (iii) conversion into shares of the Company’s Class A Common Stock at the higher of $ per share or 90% of the average VWAP for the five trading days prior to the date of the conversion notice, among other terms.
Series B Preferred Stock
On January 22, 2025, the Company issued shares of its Series B Preferred Stock under the automatic exchange of its Senior PIK Notes, as more fully discussed in Note 9. The Company recorded a finder’s fee of $175,000 in connection with the automatic exchange. Finder’s fee agreements are more fully discussed below. During the three months ended March 31, 2025, two holders of Series B Preferred Stock exchanged at total of shares of their Series B Preferred Stock for shares of Series C Preferred Stock, as more fully discussed below, leaving a balance of shares of Series B Preferred Stock outstanding on March 31, 2025. During the three months ended March 31, 2025, the Company recorded $31,988 of undeclared dividends on its Series B Preferred Stock. The total stated value and the undeclared dividends of the Series B Preferred Stock at March 31, 2025, of $3.3 million, were convertible into approximately 1.3 million shares of the Company’s Class A Common Stock at an assumed conversion price of $2.60 per share.
Series B Preferred Stock Designation
On November 27, 2024, the Company authorized up to shares of its Series B Preferred Stock. Each share of Series B Preferred Stock shall have a par value of $ per share and a stated value equal to $ per share. Terms of the Series B Preferred Stock include: (i) dividends at 5% per annum, (ii) voting rights, which include voting as one class with the common stockholders, (iii) conversion into shares of the Company’s Class A Common Stock at the higher of $ per share or 90% of the average VWAP for the five trading days prior to the date of the conversion notice and (iv) no conversions prior to the first anniversary of the original issue date, among other terms. No shares of Series B Preferred Stock will be convertible into Class A Common Stock prior to the one-year anniversary of the date of issuance. Each share of Series B Preferred Stock will have one vote. See Note 16 Subsequent Events.
Series C Preferred Stock
During the three months ended March 31, 2025, the Company issued shares of its Series C Preferred Stock to an investor for net cash proceeds of $44,825. Per the terms of this issuance and an issuance to an investor of shares of the Company’s Series C Preferred Stock for cash in the fourth quarter of 2024, these investors, who were also holder’s of Series B Preferred Stock could exchange their Series B Preferred Stock for shares of Series C Preferred Stock at a premium. The two investors elected to make the exchange. As a result, during the three months ended March 31, 2025, the Company exchanged shares of its Series B Preferred Stock for shares of its Series C Preferred Stock. The Company recorded deemed dividends of $75,000 for the issuances, which represented the difference between the $225,000 stated value of the Series C Preferred Stock issued and the $150,000 stated value of the Series B Preferred Stock exchanged. During the three months ended March 31, 2025, the Company recorded $3,526 of undeclared dividends on its Series C Preferred Stock and the total accumulated undeclared dividends were $3,843 as of March 31, 2025. The total stated value and the accumulated undeclared dividends of the Series C Preferred Stock at March 31, 2025, of $0.4 million, were convertible into approximately million shares of the Company’s Class A Common Stock at an assumed conversion price of $2.60 per share.
Series C Preferred Stock Designation
On November 27, 2024, the Company authorized up to shares of its Series C Preferred Stock. Each share of Series C Preferred Stock shall have a par value of $ per share and a stated value equal to $ per share. Terms of the Series C Preferred Stock include: (i) dividends at 5% per annum, (ii) voting rights, which include voting as one class with the common stockholders and each share of Series C Preferred Stock shall have one vote, (iii) conversion into shares of the Company’s Class A Common Stock at the higher of $ per share or 90% of the average VWAP for the five trading days prior to the date of the conversion notice and (iv) no conversions prior to the first six months of the original issue date or until a registration statement registering the underlying shares of common stock is declared effective, among other terms. See Note 16 Subsequent Events.
Series D Preferred Stock
shares of Series D Preferred Stock were issued or converted during the three months ended March 31, 2025 and as noted below, there are no dividends on the Series D Preferred Stock. As of March 31, 2025, the total stated value of the Series D Preferred Stock of $4.3 million was convertible into million shares of the Company’s Class A Common Stock at an assumed conversion price of $1.308 per share.
Series D Preferred Stock Designation
On December 6, 2024, the Company authorized up to shares of its Series D Preferred Stock. Each share of Series D Preferred Stock shall have a par value of $ per share and a stated value equal to $ per share. Terms of the Series C Preferred Stock include: (i) no dividends, (ii) no voting rights, expect as in regards to any changes related to the Series D Preferred Stock, and (iii) conversion into shares of the Company’s Class A Common Stock at the higher of $ per share or 90% of the average VWAP for the five trading days prior to the date of the conversion notice, among other terms.
Class A Common Stock
As of March 31, 2025 and December 31, 2024, there were and shares of the Company’s Class A Common Stock issued and outstanding, respectively.
Common Stock Issued to KR8 under KR8 Agreement
During the three months ended March 31, 2024, the Company issued shares of its Class A Common Stock pursuant to the KR8 Agreement, which is more fully discussed in Note 10.
October 13, 2023 Strata Purchase Agreement
On October 13, 2023, the Company entered into a Strata Purchase Agreement (the “Strata Purchase Agreement”) with ClearThink, as supplemented by that certain Supplement to Strata Purchase Agreement, dated as of October 13, 2023, by and between the Company and ClearThink. Pursuant to the Strata Purchase Agreement, after the satisfaction of certain commencement conditions, including, without limitation, the effectiveness of the Registration Statement, ClearThink has agreed to purchase from the Company, from time to time upon delivery by the Company to ClearThink of request notices, and subject to the other terms and conditions set forth in the Strata Purchase Agreement, up to an aggregate of $2.0 million of the Company’s Class A Common Stock. On August 13, 2024, the Company entered into Amendment No. 1 to the Strata Purchase Agreement pursuant to which the commitment amount was increased from $2.0 million to $5.0 million. No shares of the Company’s Class A Common Stock were issued under the terms of the Strata Purchase Agreement, as amended, during the three months ended March 21, 2025 and 2024. See Note 16 Subsequent Events.
Common Stock Issued to MSK Under Shares for Services Agreement
On September 19, 2023, the Company entered into a Shares for Services Agreement with Mitchell Silberberg & Knupp LLP, a service provider (“MSK”). Pursuant to the Shares for Services Agreement, during the three months ended March 31, 2024, the Company issued MSK shares of its Class A Common Stock in full satisfaction of its obligation to MSK under the Shares for Services Agreement.
Common Stock Issued Under Corporate Development Advisory Agreements
On March 5, 2024, the Company issued shares of its Class A Common Stock to Tysadco Partners valued at $153,000 under the Corporate Development Advisory Agreement dated effective February 26, 2024. Under the agreement, Tysadco Partners was providing strategic, financing, capital structure and other guidance and expertise to the Company’s management.
Common Stock Issued/Issuable in Connection with Notes Payable
During the three months ended March 31, 2025, the Company issued shares of its Class A Common Stock for conversions and exchanges of $828,474 of promissory notes payable and related accrued interest. In addition, during the three months ended March 31, 2025, the Company issued shares of its Class A Common Stock as inducements and commitment shares under the terms of various promissory notes and it agreed to issue an additional shares of its common stock as inducements and commitment shares under the terms of promissory notes. The value of the shares issued and issuable under the terms of and conversions and exchanges of promissory notes are more fully discussed in Note 9.
Common Stock Issued to Smithline
During the three months ended March 31, 2025, the Company issued shares of its Class A Common Stock in connection with a legal settlement, which is more fully discussed in Note 14 under the heading, “Smithline Family Trust II vs. FOXO Technologies Inc. and Jon Sabes.”
Common Stock Issued to J.H. Darbie & Co., Inc.
During the three months ended March 31, 2025, the Company issued shares of its Class A Common Stock to J.H. Darbie & Co., Inc. (“J.H. Darbie”) for advisory services and private placement engagement as follows:
Advisory Services
On July 25, 2024, FOXO entered into the advisory agreement with J.H. Darbie pursuant to which J.H. Darbie was engaged as nonexclusive financial adviser. The term of the agreement was six months. As compensation for the services performed under the agreement, the Company issued J.H. Darbie shares of its Class A Common Stock effective January 13, 2025.
Private Placement Engagement
On July 25, 2024, FOXO engaged J.H. Darbie, on an exclusive basis, to provide services in connection with private placements (the “Engagement”). The term of the Engagement was 120 days, subject to early termination provisions in the Engagement. Under the Engagement, J.H. Darbie has a right of first refusal for all financing, cash, common stock or convertible securities, debt or equity, for six months after the termination of the Engagement. As compensation for the services performed under the Engagement, the Company issued to J. H. Darbie shares of its Class A Common Stock effective in January 2025. As additional compensation for the services to be rendered by J.H. Darbie under the Engagement, FOXO agreed to (i) pay a cash fee to J.H. Darbie equal to 3% of the principal amount of the securities to be exchanged and 5% of gross proceeds raised from the sale of the securities to customers of J.H. Darbie; and (ii) issue to J.H. Darbie warrants to purchase a number of shares of the Company’s Class A Common Stock equal to the cash fee.
On November 7, 2024, FOXO and J.H. Darbie entered into an amendment to the Engagement pursuant to which the compensation for the services to be rendered by J.H. Darbie was revised to a cash fee equal to $175,000 for advising, 10% of gross proceeds raised from the sale of the securities to customers of J.H. Darbie, and common stock equal to 5% of the cash fee. The common stock issued will have piggyback rights and be priced at the closing price the date the offering closes. Again, on November 22, 2024, FOXO and J.H. Darbie entered into an amendment to the Engagement pursuant to which the scope of the engagement was revised to an exchange of debt from existing lenders of FOXO to equity. Therefore, during the three months ended March 31, 2025, the Company accrued a cash fee of $175,000 in connection with the issuance of its Series B Preferred Stock in exchange for the Senior PIK Notes as more fully discussed above and in Notes 2 and 9. During the three months ended March 31, 2025, shares or warrants were issued to J.H Darbie under this Engagement.
Finder’s Fee Agreement
On October 9, 2023, the Company entered into the Finder’s Agreement, by and between the Company and the finder. Pursuant to the Finder’s Agreement the Company agreed to pay the Finder a cash fee equal to 4% of the gross proceeds received by the Company from the equity transactions contemplated by the Second Strata Purchase Agreement. The Company also agreed to issue to the finder a 5-year warrant to purchase shares of the Company’s Class A Common Stock equal to 1% warrant coverage based on the amount raised from the equity transactions with an exercise price per share equal to 110% of the transaction (as defined in the Finder Agreement) or the public market closing price of the Company’s Common Stock on the date of the transaction, whichever is lower, subject to anti-dilutive price protection and participating registration rights. In addition, under the Finder Agreement, the Company was obligated to pay the finder a 3% to 7% cash fees and 7% warrant coverage based on the gross cash proceeds from the issuances of the certain promissory notes payable as more fully discussed in Note 9.
Finder’s Warrants Amendment to Finder’s Agreement
Pursuant to the terms of the Finder’s Agreement, discussed above, and in connection with a private placement of the Company’s Class A Common Stock under the Strata Purchase Agreement during the three months ended December 31, 2023, the Company issued or was obligated to issue to the Finder 1,290 warrants to acquire shares of the Company’s common stock under the terms of the Finder’s Agreement. The warrants had a five-year term and were exercisable into shares of the Company’s Class A Common Stock at a weighted average exercise price of $26.35 per share. In addition, in connection with the issuances of the ClearThink Notes, the LGH Note Payable and IG Note Payable through August 22, 2024, which are more fully discussed in Note 9, the Company was obligated to issue 9,607 additional warrants to purchase shares of the Company’s common stock under the terms of the Finder’s Agreement. The additional warrants had a five-year term and were exercisable into shares of the Company’s Class A Common Stock at a weighted average exercise price of $6.45 per share.
On August 22, 2024, the Company entered into an amendment to the Finder Agreement (the “Amended Finder’s Agreement”) in which the Company agreed to issue to the Finder shares of its Class A Common Stock for the termination of all the Finder’s common stock warrants and outstanding cash fees owed as of that date. Also, pursuant to the Amended Finder’s Agreement, the Finder will no longer receive a cash fee for any equity/convertible debt financing except for an equity line of credit in which case the cash fee will be 4%. Compensation for an equity/convertible debt financing will be made in the form of common stock equal to 14% of the gross proceeds of an equity/convertible debt financing and 10% of a non-dilutive debt financing. In addition to the shares of the Company’s Class A Common Stock noted above, the Company owed the finder shares of its Class A Common Stock as finder’s fee in connection with certain notes payable entered into subsequent to August 22, 2024, or a total of shares of its Class A Common Stock as of December 31, 2024. As a result of the notes payable entered into during the three months ended March 31, 2025, the Company is obligated to issue an additional shares of its Class A Common Stock to the finder. During the three months ended March 31, 2025, the Company issued shares of its Class A Common Stock to the finder leaving a balance of finder’s fee shares owed and issuable to the finder as of March 31, 2025. The finder’s fees owed in connection with notes payable are more fully discussed in Note 9.
Warrants
Public Warrants and Private Placement Warrants
As of March 31, 2025 and December 31, 2024, the Company had outstanding 50,566 Public Warrants and 1,589 Private Placement Warrants each with an exercise price of $2,289 per share and each expiring on September 15, 2027 or earlier upon redemption or liquidation. The Public Warrants and Private Placement Warrants are more fully described in Note 13 to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2024. At March 31, 2025 and December 31, 2024, the fair values of the Public Warrants and Private Placement warrants were $9,652 and $41,246, respectively.
Assumed Warrants
Effective September 15, 2022, the Company consummated a business combination. At the closing of the business combination, the Company assumed warrants, referred to as the Assumed Warrants. The Assumed Warrants included down round provisions that should the Company issue common stock or common stock equivalents, excluding certain exempt issuances, for consideration of less than the then exercise price per share, then the exercise price of the Assumed Warrants shall be lowered to the new consideration amount on a per share basis with a simultaneous and corresponding increase in the number of warrants. As a result of a triggering event in 2023, as of December 31, 2023, 100,897 Assumed Warrants were outstanding with an exercise price of $15.92 per share.
On February 23, 2024, 30,094 Assumed Warrants expired by their terms and on February 24, 2024, and Assumed Warrants exercisable into 70,802 shares of the Company’s Common Stock were extended until February 23, 2025, in connection a legal settlement as more fully discussed in Note 14 under the heading, “Smithline Family Trust II vs. FOXO Technologies Inc. and Jon Sabes.”). On February 24, 2024, the Company issued its Class A Common Stock to Tysadco Partners, as more fully discussed above, which triggered the down round provisions of the Assumed Warrants. As a result, as of March 31, 2024, the Assumed Warrants were exercisable into 166,594 shares of the Company’s Common Stock with an exercise price of $6.77 per share. The incremental value of the modifications to the Assumed Warrants as a result of the trigger of the down round provisions and the extension of the expiration date was $ million and was recorded as a deemed dividend in the three months ended March 31, 2024. The incremental value was measured using the Black Scholes valuation model with following assumptions: risk free rate of %, volatility of %, term of year and expected dividend yield of $.
As a result of two additional triggers of the down round provisions during the remainder of 2024, as of December 31, 2024, the Assumed Warrants were exercisable into 237,513 shares of the Company’s Class A Common Stock with an exercise price of $4.36 per share. Partially offsetting the increase in the number of outstanding Assumed Warrants on December 31, 2024, was the exchange of 31,250 Assumed Warrants under the terms of an exchange agreement dated May 28, 2024, between the Company and Smithline Family Trust II (“Smithline”) as more fully discussed in Note 14.
During February 2025, three additional triggers of the down round provisions of the Assumed Warrants occurred as a result of two conversions of Series A Preferred Stock into the Company’s Class A Common Stock and the conversion prices of the Company’s preferred stock on February 23, 2025. The incremental value of the modifications to the Assumed Warrants as a result of the triggers of the down round provisions during February 2025 resulted in deemed dividends of $ million in the three months ended March 31, 2025. The incremental values were measured using the Black Scholes valuation model with the following assumptions: risk free rates ranging from % to %, volatility ranging from % to , terms of to days and expected dividend yield of $. On February 23, 2025, the 264,898 Assumed Warrants with an exercise price of $3.855 per share expired per their terms.
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