8-K: FOXO Delisted, Restates Q1 Financials

FOXO Technologies Inc. faces delisting from NYSE American and announces restatement of its Q1 2025 financial statements due to an accounting error.

Summary

• FOXO Technologies Inc. was delisted from NYSE American on August 12, 2025, due to its Class A Common Stock falling below the minimum $0.10 selling price.
• Trading of the company's stock was immediately suspended by NYSE American on August 12, 2025.
• The company's Class A Common Stock commenced trading on the OTC market as of August 13, 2025, under the symbol FOXO, following FINRA confirmation.
• On August 14, 2025, the Board of Directors concluded that the unaudited condensed consolidated financial statements in the Quarterly Report on Form 10-Q for the three months ended March 31, 2025, should no longer be relied upon.
• The non-reliance is due to an error in accounting for measurement-period purchase price consideration related to the September 10, 2024, acquisition of Rennova Community Health, Inc. (RCHI).
• The company should have recorded an additional $5.1 million ($5,132,928) in purchase price consideration as a liability at March 31, 2025, for settled cumulative debts and liabilities exceeding $5.0 million.
• This correction will increase goodwill by $5,132,928 and related parties payables and accrued expenses by $5,132,928.
• Total assets will increase from $41,878,452 to $47,011,380, and total liabilities will increase from $32,225,606 to $37,358,534.
• The working capital deficit will increase from $(25,462,974) to $(30,595,902).
• The correction did not impact the statement of operations, stockholders equity, total cash flows, net loss, or comprehensive loss.
• A scrivener's error also inadvertently switched notes payable and notes payable related parties amounts in the Original 10-Q, which will be corrected.

Sentiment

Score: 2

Explanation: The filing indicates severe negative events including delisting from a major exchange, immediate trading suspension, and a material financial restatement due to an accounting error. These issues point to significant financial distress, poor internal controls, and a substantial loss of investor confidence, outweighing any minor procedural positives like moving to OTC.

Negatives

• Delisting from NYSE American due to failure to meet minimum share price requirements.
• Immediate suspension of trading by NYSE American.
• Previously issued Q1 2025 financial statements cannot be relied upon due to a material accounting error.
• The accounting error resulted in an understatement of liabilities by $5,132,928, leading to an increase in total liabilities and a worsening of the working capital deficit.
• Discovery of a scrivener's error in notes payable amounts, indicating further financial reporting inaccuracies.
• Potential negative impact on financial results and stock price due to the review process and any subsequent regulatory actions.

Risks

• The review of the company's accounting, accounting policies, and internal control over financial reporting.
• The preparation and review of the Original 10-Q, the Amended 10-Q, and other filings with the Securities and Exchange Commission.
• The subsequent discovery of additional adjustments to the company's previously issued financial statements.
• Actual events or results may differ materially from the company's expectations.
• The company's financial results and stock price may suffer as a result of this review and any subsequent determinations or actions by governmental or other regulatory bodies.

Future Outlook

The Company anticipates filing an amended Quarterly Report on Form 10-Q for the three months ended March 31, 2025, as soon as practicable to reflect the corrected financial statements. However, the Company cautions that its financial results and stock price may suffer as a result of this review and any subsequent determinations or regulatory actions.

Management Comments

• The Board and the Company's management have discussed the matters in this Current Report on Form 8-K with its independent registered public accounting firm, Kreit & Chiu CPA LLP.

Industry Context

The delisting from a major exchange like NYSE American to the OTC market is a significant downgrade, often indicative of severe financial distress or governance issues, and typically results in reduced liquidity and investor confidence. The restatement of financial statements due to an accounting error, especially one involving a material amount related to an acquisition, highlights potential weaknesses in internal controls over financial reporting, which is a critical concern for investors and regulators across any industry.

Comparison to Industry Standards

• Delisting from a major exchange like NYSE American due to a low share price (below $0.10) is a severe event, placing FOXO Technologies Inc. in a category with companies facing significant financial distress, unlike peers maintaining listing standards on primary exchanges.
• The subsequent move to the OTC market, while allowing continued trading, typically results in reduced liquidity and investor visibility compared to companies listed on the NYSE or NASDAQ.
• The restatement of financial statements due to a material accounting error, particularly concerning acquisition-related liabilities, indicates a lapse in financial reporting accuracy and internal controls.
• This contrasts sharply with industry best practices for public companies, which emphasize robust internal controls (e.g., SOX compliance) to ensure reliable financial reporting. For example, well-governed companies like Johnson & Johnson or Microsoft maintain stringent internal controls to prevent such material errors, ensuring investor confidence.
• The error's impact, increasing total liabilities by over $5 million and worsening the working capital deficit, suggests a more precarious financial position than previously reported, diverging from the financial stability expected of publicly traded entities.

Related Party Transactions

• Acquisition of Rennova Community Health, Inc. (RCHI) from Rennova Health, Inc. (RHI).
• Additional purchase price consideration of $5,132,928 owed to RHI as a liability.

Stakeholder Impact

• Shareholders: Significant negative impact due to delisting from NYSE American, reduced liquidity on OTC, loss of confidence due to financial restatement, and potential stock price decline.
• Creditors: The restatement clarifies and increases the recorded liabilities, particularly to RHI, which could impact their assessment of the company's ability to meet obligations.
• Management/Employees: Increased scrutiny and workload due to financial restatement and regulatory issues.
• Regulatory Authorities (SEC, NYSE): Increased oversight and potential for further actions due to non-compliance with listing standards and financial reporting errors.

Next Steps

• File an amended Quarterly Report on Form 10-Q for the three months ended March 31, 2025, to reflect corrected financial statements.
• Correct the scrivener's error on notes payable and notes payable related parties amounts on the amended balance sheet.

Key Dates

Recommendation

The delisting from NYSE American to the OTC market, coupled with an immediate trading suspension, signals severe financial distress and a significant loss of market credibility. The material restatement of Q1 2025 financial statements due to a $5.1 million accounting error, which increased liabilities and worsened the working capital deficit, indicates fundamental weaknesses in financial reporting and internal controls. These factors collectively point to a highly uncertain future, diminished investor confidence, and a high probability of further stock price depreciation and liquidity issues. Seasoned investors would view these events as strong indicators to exit positions.

Keywords

FOXO Technologies, 8-K filing, SEC filing, delisting, NYSE American, OTC Markets, financial restatement, accounting error, Form 10-Q, acquisition accounting, Rennova Community Health, corporate governance, financial reporting, stock market suspension