8-K: FOXO Technologies Converts Debt to Preferred Stock

FOXO Technologies Inc. has converted $200,000 in prior advances from related party Rennova Health, Inc. into 8,000 shares of Series E Preferred Stock.

Summary

• FOXO Technologies Inc. (the Company) entered into a Series E Preferred Stock Exchange Agreement with Rennova Health, Inc. (the Investor) effective December 31, 2025.
• The agreement converts $200,000 in previously advanced funds (Prior Advances) from Rennova to FOXO into 8,000 shares of FOXO's Series E Cumulative Redeemable Secured Preferred Stock.
• The Series E Preferred Stock has a stated value of $25.00 per share.
• The Prior Advances were made between December 4, 2025, and December 10, 2025.
• Upon issuance of the Series E Shares, the Prior Advances will be fully satisfied, cancelled, and of no further force or effect, and Rennova will no longer have creditor rights for these amounts.
• The transaction is considered a related party transaction because Seamus Lagan serves as the Chief Executive Officer of both FOXO Technologies Inc. and Rennova Health, Inc.
• FOXO's Board of Directors approved the transaction, with conflicted directors abstaining, determining it to be fair and in the best interests of unaffiliated stockholders.
• The Series E Preferred Stock will be issued under an exemption from registration (Section 4(a)(2) and/or Regulation D), with Rennova confirming its status as an accredited investor.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a neutral to slightly positive event, as it cleans up the balance sheet by converting debt to equity, but the related-party nature and preferred stock terms warrant careful monitoring.

Positives

• Eliminates $200,000 in outstanding liabilities from the Company's books, improving the balance sheet.
• Strengthens the Company's capital structure by converting debt to equity.
• The Board of Directors, with disinterested members, determined the terms to be fair and in the best interests of unaffiliated stockholders, addressing potential governance concerns.

Negatives

• The transaction is a related party transaction, raising potential conflict of interest concerns, despite Board approval by disinterested directors.
• Issuance of preferred stock could dilute future common equity holders if converted, or impose redemption obligations on the Company.
• The Series E Shares are unregistered and subject to transfer restrictions, limiting liquidity for the investor.

Risks

• Potential conflicts of interest due to common management (Seamus Lagan as CEO of both FOXO and Rennova) in a related party transaction.
• The Series E Preferred Stock is unregistered and subject to transfer restrictions, which could limit the investor's ability to liquidate their investment.
• Future conversion of the Series E Preferred Stock into common stock could lead to dilution for existing common stockholders.
• The Company's covenant to maintain its OTC Markets quotation is crucial; failure could negatively impact the liquidity and valuation of its securities.

Future Outlook

The Company covenants to timely file all reports required under the Exchange Act and maintain its quotation on the OTC Markets. It also commits to promptly notify the investor of any material adverse effects, breaches, litigation, or events affecting the Series E Shares or its market quotation.

Management Comments

• "The Board of Directors of the Company has authorized the issuance of the Series E Preferred Stock and has approved this Agreement, with all conflicted directors abstaining from the approval."
• "The Board of Directors of the Company determined, after reasonable inquiry and consideration, that the terms of this transaction are fair to and in the best interests of the Company and its unaffiliated stockholders."
• "The value attributed to the Series E Shares in this exchange was determined by the disinterested directors after consideration of, among other things, the Company’s need for capital, the elimination of outstanding liabilities, the terms of the Series E Preferred Stock, current market conditions, and the Company’s financial condition."

Industry Context

StockSavvy.ai notes that converting debt to equity, especially with a related party, is a common strategy for companies facing liquidity challenges or seeking to improve their balance sheet without incurring new cash obligations. This move aligns with broader trends where smaller, growth-oriented companies, particularly those on OTC Markets, leverage existing relationships to manage capital structure. While it addresses immediate debt, the related-party nature warrants close scrutiny for potential governance implications, a factor often highlighted in analyses of similar transactions across the biotech or health tech sectors.

Comparison to Industry Standards

• The conversion of debt to preferred equity is a standard financial restructuring tool, often employed by companies to reduce liabilities and improve solvency ratios, similar to practices seen in distressed or early-stage companies across various industries.
• The stated value of $25.00 per share for preferred stock is a common nominal value, but the actual economic value and terms (e.g., redemption, conversion rights) would need to be compared to similar preferred stock issuances by companies of comparable size and risk profile, such as those in the micro-cap biotech or health-tech space like Aytu BioPharma (AYTU) or Sio Gene Therapies (SIOX) which have utilized preferred stock in financing rounds.
• The related-party nature of the transaction, with common CEO Seamus Lagan, is a critical governance consideration. While the filing states disinterested directors approved it, such arrangements are typically subject to higher scrutiny than arm's-length transactions, a standard practice in corporate governance benchmarks set by institutions like Institutional Shareholder Services (ISS) or Glass Lewis.

Corporate Governance

Related Party Transactions

• FOXO Technologies Inc. entered into a Series E Preferred Stock Exchange Agreement with Rennova Health, Inc., where Seamus Lagan serves as Chief Executive Officer for both entities.
• Trevor Langley, also a director, abstained from the vote approving the transaction due to potential conflict of interest.
• The transaction involves the conversion of $200,000 in prior advances from Rennova to FOXO into 8,000 shares of Series E Preferred Stock.

Stakeholder Impact

• Shareholders: Conversion of debt to equity improves the balance sheet by reducing liabilities, but the issuance of preferred stock could have future dilutive effects if converted to common stock, or impose redemption obligations.
• Creditors (Rennova Health, Inc.): Their prior advances are converted from debt to equity, changing their position from a creditor to a preferred equity holder.
• Management: The transaction, involving common CEO Seamus Lagan, highlights the importance of robust corporate governance in related-party dealings.

Next Steps

• The Company will issue the 8,000 shares of Series E Preferred Stock to Rennova Health, Inc.
• The Company will continue to timely file all required reports under the Exchange Act.
• The Company will use commercially reasonable efforts to maintain the quotation of its Common Stock on the OTC Markets.
• The Company will promptly notify Investor of any material adverse effects, breaches, litigation, or events affecting the Series E Shares or its market quotation.

Key Dates

Recommendation

The debt-to-equity conversion is a positive step for FOXO Technologies Inc.'s balance sheet, reducing immediate liabilities. However, the related-party nature of the transaction, while approved by disinterested directors, introduces a layer of scrutiny. The issuance of preferred stock, while not immediately dilutive to common shareholders, carries future implications depending on its terms (e.g., conversion rights, redemption features). Given these factors, a 'hold' recommendation is appropriate as investors should monitor the company's operational performance and the long-term implications of this preferred stock issuance.

Keywords

FOXO Technologies, Rennova Health, Series E Preferred Stock, Debt Conversion, Related Party Transaction, SEC Filing, Equity Issuance, Corporate Governance, Accredited Investor, OTC Markets