v3.26.1
ACQUISITION
 3 Months Ended
Mar. 31, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
ACQUISITION

Note 5 ACQUISITION

 

Vector Acquisition

 

On September 9, 2025, the Company entered into a Stock Purchase Agreement with Vector, a Wyoming corporation, (the “Vector SPA”), between the stockholders (each, a “Seller,” or, together, the “Sellers”) owning all of the issued and outstanding shares of Vector (the “Purchased Shares”) and FOXO Acquisition Corporation, a Florida corporation and wholly-owned subsidiary of the Company (“FAC”), (the “Vector Acquisition”). Upon closing on September 19, 2025, the Sellers exchanged the Purchased Shares for (i) $500,000 in cash, (ii) 60,000 shares of the Company’s Series E Cumulative Redeemable Secured Preferred Stock (the “Series E Preferred Stock”) with a stated value of $25.00 per share or a total stated value of $1,500,000 (iii) 386,847,195 three year warrants of the Company’s Class A Common Stock with an exercise price of $0.00517 per share (subject to adjustment) (the “Vector Warrants”), which was equal to the closing price of the Company’s Class A Common Stock on the trading day immediately prior to closing, plus 10%, valued at $769,826 and (iv) up to 80,000 shares of Series E Preferred Stock to be issued to the Sellers on or before 120 days after the two-year anniversary of the closing; provided that, such shares will only be issued in the event that the Qualifying Revenues (as defined) during the 12-month period between the first and second anniversary of the closing are at least $4,000,000; provided, further, that in the event that less than $4,000,000 of Qualifying Revenues are actually collected by Vector on or before 90 days after the second anniversary of the closing, the number of shares of Series E Preferred Stock to be issued to the Sellers will be reduced by an amount equal to one share for each $25.00 of Qualifying Revenues less than $4,000,000 collected by such date; and, provided, further, if a Change of Control (as defined) of the Company occurs prior to the two-year anniversary of the closing, all of the 80,000 shares of Series E Preferred Stock will be issued to the Sellers as of the date of such Change of Control. Pursuant to the SPA, the Sellers have the right, but not obligation, to repurchase the Purchased Shares under certain limited circumstances at fair market value as determined by a third party and subject to a floor. Such circumstances include, but are not limited to: (i) failure of the Company to have received approval for listing or quotation of shares of the Series E Preferred Stock within nine months of the closing, (ii) any material breach of the SPA within the second anniversary of the closing, including the requirement for FOXO or FAC to provide agreed-upon working capital, and (iii) the failure of FOXO to consummate a specified acquisition within 60 days of execution of definitive agreements. The Vector Warrants, which were valued using the Black Scholes valuation model, and the Series E Preferred Stock, which was valued based on stated value, are more fully discussed in Note 13. As of December 31, 2025, the Company has recorded $500,000 of contingent purchase price consideration as goodwill and a long-term liability. The amount was based on the estimated value of additional shares of Series E Preferred Stock (at stated value) that will be owed pursuant to current projections of Qualifying Revenue.

 

 

The purchase consideration payable to the Sellers were allocated to the net tangible and intangible assets acquired and liabilities assumed. The Company accounted for the acquisition as a business combination under U.S. GAAP. In accordance with the acquisition method of accounting under ASC Topic 805, “Business Combinations,” (“ASC 805”), the assets acquired and liabilities assumed were recorded as of the acquisition date, at their respective fair values and consolidated with those of the Company.

 

The Company completed a valuation study to determine the fair values of the assets acquired in the Vector acquisition. Based on the study that was prepared by an independent valuation firm, the assets acquired, net of liabilities assumed, were $0.7 million for Vector. The valuation firm used several methods to calculate the fair values of the intangible assets acquired in the Vector acquisition (principally trade names, licenses/permits and customer relationships) including the cost and income approaches and with-and-without, relief from royalty and multiple period excess earnings methods. Furthermore, the valuation firm reviewed and utilized ten-year projections as developed by management and calculated the cost of equity capital using the build-up model and a weighted average cost of capital using comparable, guideline companies. Management believes the book value of acquired fixed assets, other tangible assets and liabilities assumed approximated their fair values. The excess of the purchase price over the aggregate fair values of the tangible and intangible assets acquired and liabilities assumed was treated as goodwill as reflected in the table below.

 

During the measurement period, the amounts used for the purchase price allocation are subject to adjustments for a period not to exceed one year from the date of acquisition. As a result, the amount of goodwill presented below for the Vector acquisition may be increased or decreased. Included in the purchase price allocation presented below for Vector is $500,000 of the value of up to 80,000 shares of Series E Preferred Stock that may be issued if Qualifying Revenues are reached or if a change of control occurs.

 

The following table shows the allocation of the purchase price of Vector to the identifiable assets acquired and liabilities assumed as of March 31, 2026:

 

   Vector 
Initial purchase price  $2,769,826 
Additional purchase consideration   500,000 
      
Total purchase price  $3,269,826 
      
Tangible and intangible assets acquired, and liabilities assumed at fair value:     
Cash  $6,415 
Accounts receivable, net   78,338 
Inventory   8,021 
Supplies   - 
Prepaid expenses   - 
Property and equipment, net   18,187 
Intangible assets   715,874 
Right-of-use lease assets   8,912 
Accounts payable   (102,678)
Accrued expenses   (1,202)
Right-of-use lease liabilities   (7,593)
Note payable   - 
Other loans   (63,935)
Noncontrolling interest   - 
      
Assets acquired, net of liabilities assumed  $660,339 
Goodwill  $2,609,487 

 

In addition to the goodwill acquired in the Vector acquisition, as of March 31, 2026, the Company recorded additional goodwill of $182,831, which resulted from federal and state deferred tax benefits associated with the Vector acquisition. See Note 7 for an additional discussion of goodwill.

 

In addition to the purchase prices listed above, the Company incurred acquisition costs consisting of approximately $16,000 in legal fees for Vector. These fees were expensed as incurred.

 

 

The following presents the unaudited pro-forma combined results of operations of the Company for the three months ended March 31, 2025 as if the acquisition of Vector occurred on January 1, 2025.

 

  

Three Months Ended

March 31, 2025

 
Net revenues  $3,302,307 
Net loss attributable to FOXO  $(653,952)
Deemed dividends from preferred stock issuances and triggers of down round provisions and extension of Assumed Warrants   (172,125)
Net loss to common stockholders   (826,077)
Preferred stock dividends – undeclared   (314,909)
Net loss to common stockholders after undeclared preferred stock dividends  $(1,140,986)
      
Net loss per share of Class A Common Stock, basic and diluted  $(0.76)
Weighted average shares of Class A Common Stock, basic and diluted   1,506,959 

 

The unaudited pro forma results of operations do not include any adjustment as a result of the potential additional purchase price consideration of Vector as discussed above.

 

The unaudited pro-forma results of operations are presented for information purposes only. The unaudited pro-forma results of operations are not intended to present actual results that would have been attained had the acquisition of Vector been completed as of January 1, 2025 or to project potential operating results as of any future date or for any future periods.