DEF: FOXO Technologies Seeks Shareholder Approval for Preferred Stock Conversion and Voting Terms

FOXO Technologies is holding a special meeting to seek shareholder approval for the conversion of Series A Preferred Stock into common stock and related voting terms, which could result in a change of control.

Summary

• FOXO Technologies is holding a special virtual meeting on January 17, 2025, to vote on two key proposals.
• The first proposal seeks approval for the conversion of Series A Preferred Stock into Class A Common Stock, potentially exceeding 20% of outstanding common stock, and the associated voting terms.
• This conversion could lead to a change of control as defined by NYSE American rules.
• The second proposal is to approve the adjournment of the meeting, if necessary, to solicit additional proxies if there are not enough votes for the first proposal.
• The record date for determining eligible voters is January 3, 2025.
• As of the record date, there were 23,572,772 shares of Class A Common Stock and 22,540 shares of Series A Preferred Stock outstanding.
• Each share of Class A Common Stock has one vote, while Series A Preferred Stock votes are calculated based on a formula, with a current aggregate of 5,889,511 votes.
• The Series A Preferred Stock has a stated value of $1,000 per share and is convertible into Class A Common Stock at a price that fluctuates based on the market price of the Class A Common Stock.
• Currently, the conversion of Series A Preferred Stock is limited to 3,164,142 shares of Class A Common Stock until shareholder approval is obtained.
• If approved, the conversion could result in the issuance of up to 125,371,598 shares of Class A Common Stock, based on the conversion price as of the record date.
• The company is seeking approval to comply with NYSE American rules and the terms of the Exchange Agreement related to the Series A Preferred Stock issuance.

Sentiment

Score: 5

Explanation: The document is neutral in tone, presenting the facts of the special meeting and the proposals to be voted on. While there are potential risks associated with the proposals, the document does not express a strong positive or negative sentiment.

Positives

• The virtual meeting format provides ready access and cost savings for stockholders.
• Shareholders can vote online, by phone, or by mail, ensuring their shares are represented.
• The company is taking steps to comply with NYSE American rules regarding the issuance of shares.
• The company is seeking to remove the limitation on the voting power of the Series A Preferred Stock.

Negatives

• Approval of the proposal could significantly increase the number of outstanding Class A Common Stock, leading to dilution.
• The increased number of shares available for public sale could depress the market price of the Class A Common Stock.
• The potential issuance of shares may discourage strategic transactions and future financings.
• The holders of the Series A Preferred Stock could gain a majority of the total voting power, potentially controlling the company.
• If shareholder approval is not obtained within 60 days, the principal amount of a note increases from $1,000,000 to $2,500,000, which the company may not be able to pay.

Risks

• The conversion of Series A Preferred Stock could significantly dilute existing shareholders' ownership.
• The increased number of shares available for sale could negatively impact the market price of the Class A Common Stock.
• The potential for a change of control could lead to uncertainty and instability.
• Failure to obtain shareholder approval could result in a default on a note, with significant consequences for the company.
• The voting power of the Series A Preferred Stock could shift control of the company to a single group of shareholders.

Future Outlook

The company is seeking shareholder approval to remove restrictions on the conversion of Series A Preferred Stock, which could significantly increase the number of outstanding shares of Class A Common Stock and potentially lead to a change of control. The company is also seeking approval to adjourn the meeting if necessary to solicit additional proxies.

Management Comments

• The Board believes that it is in the best interests of our Company and our stockholders to be able to adjourn the Special Meeting to a later date or dates if necessary or appropriate for the above-referenced reasons.
• On behalf of our Board of Directors, thank you for your continued support and interest.

Industry Context

This announcement is related to corporate governance and capital structure changes, which are common in the public markets. The need for shareholder approval for significant share issuances and potential change of control is a standard practice to protect shareholder interests and comply with exchange listing rules.

Comparison to Industry Standards

• The requirement for shareholder approval for issuing shares exceeding 20% of outstanding stock is consistent with NYSE American listing rules, similar to other exchanges like NASDAQ.
• The use of a virtual meeting format is becoming increasingly common among public companies, reflecting a trend towards cost-effective and accessible shareholder meetings.
• The terms of the Series A Preferred Stock, including conversion rights and liquidation preferences, are typical for preferred stock issuances, although the specific terms vary based on the company's needs and market conditions.
• The potential for a change of control due to the conversion of preferred stock is a significant event that requires careful consideration by shareholders, similar to other companies undergoing significant capital structure changes.

Management Changes

Related Party Transactions

• The Exchange Agreement involves transactions with RHI, where Mr. Lagan and Mr. Langley, directors of the Company, are also directors.

Stakeholder Impact

• Shareholders could experience dilution if the proposal is approved.
• The potential change of control could impact the company's direction and strategy.
• Employees may be affected by any changes in the company's structure or leadership.
• Creditors may be impacted by the company's financial performance and ability to meet its obligations.

Next Steps

• Stockholders are urged to vote on the proposals by January 16, 2025.
• The Special Meeting will be held virtually on January 17, 2025.
• The company will file a Current Report on Form 8-K with the SEC within four business days after the end of the Special Meeting to announce the final voting results.

Key Dates

Keywords

proxy statement, special meeting, Series A Preferred Stock, Class A Common Stock, shareholder approval, conversion, voting rights, NYSE American, change of control, dilution