FOXO TECHNOLOGIES INC. References to the "Company," "us," "our" or "we" refer to
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Report
including, without limitation, statements under this "Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding our financial position, business strategy and the plans and objectives
of management for future operations, are forward- looking statements. When used
in this Report, words such as "anticipate," "believe," "estimate," "expect,"
"intend" and similar expressions, as they relate to us or our management,
identify forward-looking statements. Such forward-looking statements are based
on the beliefs of management, as well as assumptions made by, and information
currently available to, the Company's management. Actual results could differ
materially from those contemplated by the forward- looking statements as a
result of certain factors detailed in our filings with the
Overview
We are a blank check company incorporated as a
The issuance of additional shares in connection with an initial Business Combination to the owners of the target or other investors:
? may significantly dilute the equity interest of investors in the
Initial Public Offering, which dilution would if increase if the
anti-dilution provisions in the Class B common stock resulted in the
issuance of shares of Class A common stock on a greater than one-to-one
basis upon conversion of the Class B common stock;
? may subordinate the rights of holders of our common stock if preferred
stock is issued with rights senior to those afforded our common stock;
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? could cause a change in control if a substantial number of shares of
our common stock is issued, which may affect, among other things, our
ability to use our net operating loss carry forwards, if any, and could
result in the resignation or removal of our present officers and
directors;
? may have the effect of delaying or preventing a change of control of us
by diluting the stock ownership or voting rights of a person seeking to
obtain control of us; and
? may adversely affect prevailing market prices for our Units, Class A
common stock and/or warrants.
Similarly, if we issue debt securities, it could result in:
? default and foreclosure on our assets if our operating revenues after
an initial Business Combination are insufficient to repay our debt
obligations;
? acceleration of our obligations to repay the indebtedness even if we
make all principal and interest payments when due if we breach certain
covenants that require the maintenance of certain financial ratios or
reserves without a waiver or renegotiation of that covenant;
? our immediate payment of all principal and accrued interest, if any, if
the debt security is payable on demand;
? our inability to obtain necessary additional financing if the debt
security contains covenants restricting our ability to obtain such
financing while the debt security is outstanding;
? our inability to pay dividends on our common stock;
? using a substantial portion of our cash flow to pay principal and
interest on our debt, which will reduce the funds available for
dividends on our common stock if declared, our ability to pay expenses,
make capital expenditures and acquisitions, and fund other general
corporate purposes;
? limitations on our flexibility in planning for and reacting to changes
in our business and in the industry in which we operate;
? increased vulnerability to adverse changes in general economic,
industry and competitive conditions and adverse changes in government
regulation; and
? limitations on our ability to borrow additional amounts for expenses,
capital expenditures, acquisitions, debt service requirements, and
execution of our strategy and other purposes and other disadvantages
compared to our competitors who have less debt.
As indicated in the unaudited condensed financial statements and related notes
included under "Item 1. Financial Statements", at
The FOXO Business Combination
On
Upon the Closing of the Transaction, each securityholder of FOXO will receive newly-issued securities of the Company, including, as applicable, shares of our common stock and/or securities convertible into or exchangeable for our common stock, as further described below. At the Closing, holders of shares of FOXO Class B common stock, which have ten votes per share, will receive shares of newly-issued Class V common stock of the Combined Company, which will also have ten votes per share on matters brought to a vote of stockholders of the Combined Company; holders of FOXO Class A common stock, which have one vote per share, will receive shares of Class A common stock of the Combined Company, which also have one vote per share. Upon the Closing, all of the outstanding shares of our Class B common stock will convert automatically into shares of our Class A common stock in accordance with the terms of our Amended and Restated Certificate of Incorporation.
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In connection with the FOXO Transaction Agreement, we also entered into several
ancillary agreements, including: (i) a Common Stock Purchase Agreement with
Cantor, pursuant to which, the Combined Company after the Closing has the right
from time to time to sell to Cantor up to
On
Recent Developments
The FOXO Transaction Agreement was further amended on
On
Copies of the Second and Third FOXO Transaction Agreement are attached as Exhibits 2.1 and 2.2 to this Report and are incorporated herein by reference. The disclosures set forth herein are intended to be a summary only and is qualified in its entirety by reference to the Second and Third FOXO Transaction Agreement.
On
On
On
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Results of Operations
Our entire activity through
For the three and six months ended
Liquidity and Capital Resources
Until the consummation of the Initial Public Offering, our only sources of
liquidity were an initial purchase of Founder Shares for
On
In connection with the Initial Public Offering, we incurred offering costs of
As of
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In order to fund working capital deficiencies or finance transaction costs in
connection with an intended initial Business Combination, our Sponsor or an
affiliate of our Sponsor or certain of our officers and directors may, but are
not obligated to, loan us funds as may be required. If we complete our initial
Business Combination, we would repay such loaned amounts out of the proceeds of
the Trust Account released to us. In the event that our initial Business
Combination does not close, we may use a portion of the working capital held
outside the Trust Account to repay such loaned amounts but no proceeds from our
Trust Account would be used for such repayment. Up to
On
In connection with the Extension Amendment, on
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial Business Combination. Moreover, we may need to obtain additional financing either to complete our initial Business Combination or because we become obligated to redeem a significant number of our Public Shares upon completion of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. In addition, we target businesses larger than we could acquire with the net proceeds of our Initial Public Offering and the sale of the Placement Units, and may as a result be required to seek additional financing to complete such proposed initial Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial Business Combination. If we are unable to complete our initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial assets.
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Contractual Obligations
In
At
The underwriters in our Initial Public Offering were paid a cash underwriting
fee of 2% of gross proceeds of the Initial Public Offering or
On
Pursuant to a registration rights agreement entered into on
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Critical Accounting Policies
The preparation of the unaudited condensed financial statements and related notes included under "Item 1. Financial Statements" and related disclosures in conformity with GAAP requires the Company's management 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 income and expenses during the periods reported. Actual results could materially differ from those estimates. The Company has identified the following as its critical accounting policies:
Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC 480. Common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of events not solely within the Company's control) is classified as temporary equity. At all other times, common stock is classified as stockholders' equity (deficit). The Company's common stock features certain redemption rights that are considered to be outside of the Company's control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders' equity (deficit) section of the Company's balance sheet.
Loss Per Common Share
Basic loss per common share is computed by dividing net income applicable to
common stockholders by the weighted average number of common shares outstanding
during the period. Consistent with ASC 480, common stock subject to possible
redemption, as well as their pro rata share of undistributed trust earnings
consistent with the two-class method, have been excluded from the calculation of
loss per common share for the periods ended
Warrant Liability
We account for our outstanding Public Warrants and Placement Warrants in accordance with ASC 815-40, under which the Warrants do not meet the criteria for equity classification and must be recorded as liabilities. As both the Public Warrant and Placement Warrants meet the definition of a derivative under ASC 815, they are measured at fair value at inception and at each reporting date in accordance with the guidance in ASC 820, with any subsequent changes in fair value recognized in the statement of operations in the period of change.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the unaudited condensed financial statements and related notes included under "Item 1. Financial Statements".
Factors That May Adversely Affect our Results of Operations
Our results of operations and our ability to complete an initial Business
Combination, such as the FOXO Business Combination, may be adversely affected by
various factors that could cause economic uncertainty and volatility in the
financial markets, many of which are beyond our control. Our business could be
impacted by, among other things, downturns in the financial markets or in
economic conditions, increases in oil prices, inflation, increases in interest
rates, supply chain disruptions, declines in consumer confidence and spending,
the ongoing effects of the COVID-19 pandemic, including resurgences and the
emergence of new variants, and geopolitical instability, such as the military
conflict in the
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