8-K: Limitless X Swaps Class C for New 15% Series D Preferred Stock

Limitless X Holdings Inc. exchanged Class C Convertible Preferred Stock for new Series D 15% Cumulative Redeemable Perpetual Preferred Stock with related parties, including its CEO, who also waived accrued dividends.

Summary

• Limitless X Holdings Inc. (the Company) entered into Exchange Agreements with EM1 Capital, LLC, Amarose, Inc., and Limitless Performance Inc (LPI) on February 23, 2026.
• These entities are controlled by Jaspreet Mathur, the Company's Chief Executive Officer and a greater than 10% shareholder.
• The agreements involve the exchange of all Class C Convertible Preferred Stock for shares of Series D 15% Cumulative Redeemable Perpetual Preferred Stock.
• Holders of Class C Stock irrevocably waived all accrued and unpaid dividends on their Class C shares through the day preceding the closing date.
• The exchange ratio was calculated based on the Class C Stock's stated value (100 times the 30-day weighted average common stock price of $1.04, equaling $104.00 per Class C share) and the Series D Stock's stated value of $25.00 per share.
• A total of 304,264 Class C shares were exchanged for 1,264,365 Series D shares.
• No additional cash consideration was paid, except for fractional shares.
• The Series D Stock was issued in reliance on exemptions from registration under the Securities Act of 1933 and state securities laws and bears a restrictive legend.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a neutral event. While the waiver of accrued dividends is positive, the issuance of new preferred stock with a 15% cumulative dividend creates a significant ongoing financial obligation, and the related-party nature warrants scrutiny.

Positives

• Holders of Class C Stock, including entities controlled by the CEO, irrevocably waived all accrued and unpaid dividends on their Class C shares, which reduces the Company's liabilities.
• The exchange simplifies the Company's capital structure by converting one class of preferred stock into another.
• The Board of Directors determined the exchange is in the best interests of the Company and its stockholders.

Negatives

• The Company is issuing new Series D 15% Cumulative Redeemable Perpetual Preferred Stock, which carries a 15% cumulative dividend obligation, creating a new ongoing financial commitment.
• The Series D Stock is redeemable, meaning the Company may be obligated to redeem it in the future, potentially requiring significant cash outflow.
• The transaction is a related-party transaction, as the holders of the Class C Stock are entities controlled by the Company's CEO and a significant shareholder, which can raise corporate governance concerns regarding fairness to all shareholders.

Risks

• The Series D Stock has not been registered under the Securities Act of 1933 or any state securities laws and bears a customary restrictive legend, limiting its transferability.
• The Company will incur a new financial obligation in the form of 15% cumulative dividends on the Series D Preferred Stock.
• Potential for future redemption obligations for the Series D Preferred Stock.

Future Outlook

The filing does not contain explicit forward-looking statements or guidance beyond the immediate effect of the share exchange.

Management Comments

• The board of directors of the Company has determined that the Exchange is in the best interests of the Company and its stockholders.

Industry Context

StockSavvy.ai notes that preferred stock exchanges are often used by companies to restructure their balance sheets, manage dividend obligations, or simplify their capital structure. The conversion to a cumulative preferred stock with a high dividend rate, even with a dividend waiver on the old stock, suggests a need to provide a more attractive return to key investors, especially in a related-party context.

Comparison to Industry Standards

• This transaction is a specific capital restructuring event involving related parties. Direct comparisons to industry-standard projects or results are not readily available without more context on the company's financial health or specific industry benchmarks for preferred stock issuances.
• A 15% cumulative dividend rate on preferred stock is generally considered high, often indicative of higher perceived risk or a need to incentivize investment in a challenging environment, especially when compared to typical preferred stock yields from more stable companies (e.g., utility preferred stocks might yield 4-7%).

Corporate Governance

Related Party Transactions

• The Exchange Agreements were entered into with EM1 Capital, LLC, Amarose, Inc., and Limitless Performance Inc (LPI), all of which are controlled by Jaspreet Mathur, the Company's Chief Executive Officer and a greater than 10% shareholder.
• Jaspreet Mathur signed the 8-K report as CEO of Limitless X Holdings Inc. and also signed the individual exchange agreements as Manager/CEO for the related-party holders.

Stakeholder Impact

• Shareholders (Common Stock): The waiver of accrued dividends on Class C stock is beneficial as it reduces a liability. However, the new 15% cumulative dividend on Series D preferred stock creates a new, potentially substantial, ongoing obligation that ranks senior to common stock, which could impact future earnings available to common shareholders. The related-party nature of the transaction may also raise concerns about potential dilution or preferential treatment.
• Preferred Shareholders (Class C): These holders (related parties) exchanged their Class C stock for Series D stock and waived accrued dividends. They now hold a new preferred stock with a fixed, cumulative 15% dividend, which provides a clear return profile.
• Company: The company benefits from the waiver of past accrued dividends, cleaning up a liability. However, it takes on a new, high-cost, cumulative preferred stock obligation.

Next Steps

• The Company will continue to fulfill its obligations related to the Series D 15% Cumulative Redeemable Perpetual Preferred Stock, including potential dividend payments.
• Holders of Series D Stock will be subject to transfer restrictions due to the unregistered nature of the shares.

Key Dates

Recommendation

The transaction presents a mixed bag. The waiver of accrued dividends is a positive, reducing a past liability. However, the introduction of a new 15% cumulative redeemable preferred stock, especially in a related-party transaction, creates a significant ongoing financial obligation and raises questions about the company's cost of capital and future cash flow management. Given these offsetting factors and the lack of broader financial context, a "hold" recommendation is appropriate, suggesting investors maintain their current position while monitoring the company's performance and future capital structure decisions.

Keywords

Preferred Stock Exchange, Series D Preferred Stock, Class C Preferred Stock, Related Party Transaction, Cumulative Redeemable Preferred Stock, SEC Filing, Corporate Governance, Capital Structure, Dividend Waiver, Limitless X Holdings