FOXO Foxo Technologies Inc. - 10-K

Item 1A. Risk Factors

The following risks could materially and adversely affect our business, financial condition, cash flows, and results of operations, and the trading price of our Class A Common Stock could decline. These risk factors do not identify all risks that we face. Our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations. Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. Refer also to the other information set forth in this Annual Report, including in Part II, Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” as well as our consolidated financial statements and the related notes in Part II, Item 15.

Risk Factor Summary

Our business is subject to numerous risks and uncertainties that represent challenges, including those highlighted in the section entitled “ Risk Factors ,” that represent challenges that we face in connection with the successful implementation of our strategy and growth of our business. Below we summarize what we believe are the principal risk factors, but these risks are not the only ones we face, and you should carefully review and consider the full discussion of our risk factors in the section titled “ Risk Factors ,” together with the other information in this Annual Report. The occurrence of one or more of the events or circumstances described in the section entitled “ Risk Factors ,” alone or in combination with other events or circumstances, and may have an adverse effect on our business, cash flows, financial condition and results of operations. Such risks include, but are not limited to:

Risks Related to Our Business and Industry

Our stockholders have limited voting power compared to the holders of our Series A Cumulative Convertible Redeemable Preferred Stock (the “ Series A Preferred Stock ”) and RHI controls a majority of the voting power of the Company.

Our management controls all corporate activities and can approve all transactions, including mergers, without the approval of other stockholders.

The ability of our management to control our business may limit or eliminate minority shareholders’ ability to influence corporate affairs.

Our board of directors has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to common stockholders and with the ability to affect adversely stockholder voting power, perpetuate their control, and significantly dilute existing shareholders.

We may acquire other businesses or form joint ventures or make investments in other companies in the future. If we are not successful in integrating these businesses, as well as identifying and controlling risks associated with the past operations of these businesses, we may incur significant costs, receive penalties or other sanctions from various regulatory agencies, and/or incur significant diversions of management time and attention.

We have a history of losses and we may not achieve or maintain profitability in the future.

We do not have adequate cash resources to fund our operations through December 2026 and beyond and we will require additional capital to grow our business, which may not be available on terms acceptable to us or at all

Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements, which could limit our ability to raise additional capital and thereby materially adversely impact our business.

We have not been able to access the operating capital available under the Strata Purchase Agreement because current market conditions, including the low trading price and limited trading volume of our Class A Common Stock, have prevented us from satisfying the contractual conditions required for draws under that agreement.

We have a substantial amount of intangible assets, and we have been, and may in the future be required to write down the value of our intangible assets due to impairment, which could have a material adverse effect on our financial condition and results of operations.

Recent and future management changes and any inability to attract and retain qualified management and other key personnel, could impair our ability to implement our business plan and materially adversely impact our business, results of operations and financial condition.

Our success depends in large part on the continued participation in the business of Seamus Lagan, our Chief Executive Officer, which cannot be assured or guaranteed.

We expect our revenue and results of operations to fluctuate on a quarterly and annual basis.

Changes in general economic conditions could have a material adverse impact on our business.

Changes If we are unable to maintain effective internal control over financial reporting and disclosure controls and procedures, the accuracy and timing of our financial reporting may be adversely affected.

We have substantial indebtedness many of which are in payment default, which may affect our operational and financial flexibility .

Risks Related to Our Healthcare Operations

Our results of operations may be adversely affected if the ACA is repealed, replaced or otherwise changed.

Healthcare plans have taken steps to control the utilization and reimbursement of healthcare services.

Some of our operations are subject to federal and state laws prohibiting “kickbacks” and other laws designed to prohibit payments for referrals and eliminate healthcare fraud.

We conduct our business in a heavily regulated industry and changes in regulations or violations of regulations could, directly or indirectly, harm our operating results and financial condition.

Failure to comply with complex federal and state laws and regulations related to submission of claims for services can result in significant monetary damages and penalties and exclusion from the Medicare and Medicaid programs.

Our facilities are subject to potential claims for professional liability, including existing or potential claims based on the acts or omissions of third parties, which claims may not be covered by insurance.

Our success depends on our ability to attract and retain qualified healthcare professionals. A shortage of qualified healthcare professionals could weaken our ability to deliver healthcare services.

A significant portion of our net revenues is dependent on Medicare and Medicaid payments and possible reductions in Medicare or Medicaid payments or the implementation of other measures to reduce reimbursements may reduce our revenues.

Failure to timely or accurately bill for our services could have a material adverse effect on our business.

Our operations may be adversely impacted by the effects of extreme weather conditions, natural disasters such as hurricanes and earthquakes, hostilities or acts of terrorism and other criminal activities.

Increased competition, including price competition, could have a material adverse impact on our net revenues and profitability.

Sustained inflation and staffing shortages could increase our costs of operations.

Failure to maintain the security of patient-related information or compliance with security requirements could damage the Company’s reputation with patients and cause it to incur substantial additional costs and to become subject to litigation.

Failure of the Company to comply with emerging electronic transmission standards could adversely affect our business.

Compliance with the HIPAA security regulations and privacy regulations may increase the Company’s costs.

Health care reform and related programs (e.g. Health Insurance Exchanges), changes in government payment and reimbursement systems, or changes in payer mix, including an increase in capitated reimbursement mechanisms and evolving delivery models, could have a material adverse impact on the Company’s net revenues, profitability and cash flow.

Adverse results in material litigation matters or governmental inquiries could have a material adverse effect upon the Company’s business and financial condition.

Failure in the Company’s information technology systems or delays or failures in the development and implementation of updates or enhancements to those systems could significantly delay billing and otherwise disrupt the Company’s operations or patient relationships.

Increasing health insurance premiums and co-payments or high-deductible health plans may cause individuals to forgo health insurance and avoid medical attention, either of which may reduce demand for our products and services.

Our healthcare operations are dependent on the local economies and the surrounding areas in which they operate and are concentrated in Tennessee. A significant deterioration in those economies could cause a material adverse effect on our businesses.

Risks Related to Our Life Science Services Business

Our Life Science Services operations are subject to government regulation, and failure to comply with applicable laws and regulations could adversely affect our business.

Vector’s international sourcing activities subject us to additional regulatory and operational risks.

Vector’s business depends on relationships with specimen providers, and disruptions to those relationships could adversely affect our operations.

Vector operates in a competitive biospecimen sourcing market.

Ethical or compliance failures in specimen sourcing could harm our reputation.

Quality control issues could adversely affect our business.

We may face liability related to the specimens we distribute.

Privacy and data protection laws may apply to aspects of our business.

We recently acquired Vector and may not be able to successfully integrate its operations or realize the anticipated benefits of the acquisition.

The sellers of Vector have a right to repurchase the business under certain circumstances, which could result in the loss of our investment.

We may be required to pay significant earnout consideration to the sellers of Vector, which could adversely affect our financial condition and dilute our existing stockholders.

Our business relies on third-party logistics providers.

We may face customer and supplier concentration risk.

Our growth strategy may involve acquisitions.

Our Life Science Services segment may require additional capital.

Risks Related to Owning Our Securities

Our Class A Common Stock is subject to the “penny stock” rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock cumbersome and may reduce the value of an investment in the stock.

Because the SEC imposes additional sales practice requirements on brokers who deal in our shares that are penny stocks, some brokers may be unwilling to trade them. This means that investors may have difficulty reselling their shares and may cause the price of the shares to decline.

Our stock may be traded infrequently and in low volumes, so you may be unable to sell your shares at or near the quoted bid prices if you need to sell your shares.

There currently is no active public market for our Common Stock and there can be no assurance that an active public market will ever develop. Failure to develop or maintain a trading market could negatively affect the value of our common stock and make it difficult or impossible for you to sell your shares.

The public market for our securities is volatile. This may affect not only the ability of our investors to sell their securities, but the price at which they may sell their securities.

Our common stock is subject to substantial dilution by conversions or exercises of outstanding convertible preferred stock, convertible notes, common stock warrants and other securities into common stock.

If we issue additional shares of our common stock or convertible equity or debt in the future, whether in connection with a financing or in exchange for services or rights, it will result in dilution of our existing stockholders.

FINRA has refused to process our proposed reverse stock split and our appeal of that determination may not be successful.

RISK FACTORS

In addition to the other information contained in this Annual Report, including the matters addressed under the heading “Special Note Regarding Forward-Looking Statements and Other Information Contained in this Report,” you should carefully consider the risks and uncertainties described in this Annual Report as they identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward- looking statements.

The following risk factors apply to the business and operations of the Company. These risk factors are not exhaustive, and investors are encouraged to perform their own investigation with respect to the business, financial condition and prospects of the Company. We may face additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair our business or financial condition. The following discussion should be read in conjunction with our consolidated financial statements and notes to the consolidated financial statements included herein.

Risks Related to Our Business and Industry

Our stockholders have limited voting power compared to the holders of our Series A Preferred Stock; RHI controls a majority of the voting power of the Company

Through the voting rights of our Series A Preferred Stock, RHI currently controls a majority of the voting power of our Company. For so long as the majority of Series A Preferred Stock remains outstanding, it is expected that RHI will hold a majority of our outstanding voting power and it will control the outcome of matters submitted to a stockholder vote, including the appointment of all directors of the Company.

Our management controls all corporate activities and can approve all transactions, including mergers, without the approval of other stockholders.

Our Chief Executive Officer and director, Seamus Lagan, and director, Trevor Langley, are in management of RHI with Mr. Lagan voting shares of the Company owned by RHI. Through this share ownership, Mr. Lagan has a majority of votes of our Company. Therefore, our management effectively controls all corporate activities and can approve transactions, including possible mergers, issuance of shares and compensation levels, without the approval of other stockholders. The decisions of our management may not be consistent with or in the best interests of other stockholders.

The ability of our management to control our business may limit or eliminate minority shareholders’ ability to influence corporate affairs.

Our management is deemed to beneficially own the voting rights of shares of Series A Preferred Stock through RHI that grants the holders a super majority vote in all shareholder matters. Because of this beneficial stock ownership, our management is in a position to continue to elect our board of directors, decide all matters requiring stockholder approval, including potential mergers or business changes, and determine our policies. The interests of our management may differ from the interests of other shareholders with respect to the issuance of shares, business transactions with or sales to other companies, selection of officers and directors and other business decisions. The other shareholders would have no way of overriding decisions made by our management. This level of control may also have an adverse impact on the market value of our shares because our management may institute or undertake transactions, policies or programs that may result in losses, may not take any steps to increase our visibility in the financial community and/or may sell sufficient numbers of shares to significantly decrease our price per share.

Our Board of Directors has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to common stockholders and with the ability to affect adversely stockholder voting power, perpetuate their control and significantly dilute existing shareholders .

Our Certificate of Incorporation allow us to issue shares of preferred stock without any vote or further action by our stockholders. Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors also has the authority to issue preferred stock without further stockholder approval. Thus, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock. In addition, existing series of preferred stock that have been issued allow conversions into the Company’s Class A Common Stock that would significantly dilute existing shareholders and management may authorize additional series of preferred stock that may significantly dilute existing shareholders.

We may acquire other businesses or form joint ventures or make investments in other companies or technologies in the future. If we are not successful in integrating these businesses, as well as identifying and controlling risks associated with the past operations of these businesses, we may incur significant costs, receive penalties or other sanctions from various regulatory agencies, and/or incur significant diversions of management time and attention.

We may consider or undertake strategic acquisitions of, or material investments in, businesses, products or technologies. If we make any acquisitions, we may not be able to integrate these acquisitions successfully into our existing business, and we could assume unknown or contingent liabilities. Any future acquisitions also could result in significant write-offs or the incurrence of debt and contingent liabilities, any of which could have an adverse effect on our financial condition, results of operations and cash flows. Integration of an acquired company may also disrupt ongoing operations and require management resources that would otherwise focus on developing our existing business.

We may not identify or complete these transactions in a timely manner, on a cost-effective basis, or at all, and we may not realize the anticipated benefits of any acquisition, license, strategic alliance or joint venture. To finance such a transaction, we may choose to issue Class A Common Stock as consideration, which would dilute the ownership of our stockholders. If the price of the Class A Common Stock is low or volatile, we may not be able to acquire other companies or fund a joint venture project using our shares as consideration. Alternatively, it may be necessary for us to raise additional funds for acquisitions through public or private financings. Additional funds may not be available on terms that are favorable to us, or at all.

We do not know whether we will be able to successfully integrate any acquired business, product or technology. The success of any given acquisition may depend on our ability to retain any key employees related thereto, and we may not be successful at retaining or integrating such key personnel. Integrating any business, product or technology we acquire could be expensive and time-consuming, disrupt our ongoing business, impact our liquidity, and/or distract our management. Integration may be particularly challenging if we enter into a line of business in which we have limited experience or the business operates in a difficult legal, regulatory or competitive environment. We may find that we do not have adequate operations or expertise to manage the new business.

If we are unable to integrate any acquired businesses, products or technologies effectively, our business may suffer. Whether as a result of unsuccessful integration, unanticipated costs, including those associated with assumed liabilities and indemnification obligations, negative accounting impact, or other factors, we may not realize the economic benefits we anticipate from acquisitions. In addition, any amortization or charges resulting from the costs of acquisitions could increase our expenses.

We have a history of losses and we may not achieve or maintain profitability in the future.

We have not been profitable since our inception in 2019. As of December 31, 2025, we had a working capital deficit of $25.5 million. We incurred net losses attributable to FOXO of $12.4 million and $12.4 million in the years ended December 31, 2025 and 2024, respectively. We expect we will require significant capital in connection with our efforts, and we will be required to continue to make significant investments to further develop and expand our businesses. In addition, to the extent our business activity increases as we expect, we will need to increase our headcount in the coming years. Despite these investments, we may not succeed in increasing our revenue on the timeline that we expect or in an amount sufficient to lower our net loss and ultimately become profitable. Moreover, if our revenue does not increase, we may not be able to reduce costs in a timely manner because many of our costs are fixed, at least in the short term. Accordingly, we may not achieve or maintain profitability and we may continue to incur significant losses in the future.

We do not have adequate cash resources to fund our operations through December 2026 and beyond and we will require additional capital to grow our businesses, which may not be available on terms acceptable to us or at all.

Our present capital is insufficient to meet operating requirements and corporate overhead, or to cover losses, and therefore we need to raise additional funds through financings to execute on our business plans. Many factors will affect our capital needs as well as their amount and timing, including our growth and profitability as well as market disruptions and other developments. We have taken various actions to bolster our cash position, including raising funds through the transactions described herein and conserving cash by issuing the shares of Class A Common Stock in satisfaction of outstanding amounts payable by us to various parties. Based on the size of our current operations, we do not have sufficient capital to fund our corporate overhead for at least 12 months from the date hereof. We will need additional financing or other increase in our cash and cash equivalents balance to enable us to fund our operations through 2026 and beyond.

Historically, we have funded our operations and capital expenditures primarily through equity issuances and debt instruments. We evaluate financing opportunities from time to time, and our ability to obtain financing will depend, among other things, on our development efforts, business plans and operating performance, and the condition of the capital markets at the time we seek financing. We cannot be certain that additional financing will be available to us on favorable terms, or at all.

If we raise additional funds through the issuance of equity, equity-linked or debt securities, our existing stockholders may experience dilution. Any debt financing secured by us in the future could require that a substantial portion of our operating cash flow be devoted to the payment of interest and principal on such indebtedness, which may decrease available funds for other business activities, and could involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities.

Our ability to raise additional funds in the short term will depend on financial, economic and market conditions and the willingness of potential investors or lenders to provide funding, all of which are outside of our control, and we may be unable to raise financing in the short term, or on terms favorable to us, or at all. Furthermore, significant volatility in the capital markets has had, and could continue to have, a negative impact on the price of the Class A Common Stock and could adversely impact our ability to raise additional funds.

Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements, which could limit our ability to raise additional capital and thereby materially adversely impact our business.

Our audited financial statements for the years ended December 31, 2025 and 2024 were prepared assuming that we will continue as a going concern. Primarily, as a result of our losses, limited working capital, debt obligations and significant operating costs expected to be incurred in the next twelve months, the report of our independent registered public accounting firm included elsewhere in this Annual Report contains an explanatory paragraph on our financial statements stating there is substantial doubt about our ability to continue as a going concern. Such an opinion could materially limit our ability to raise additional funds through the issuance of new debt or equity securities or otherwise. There is no assurance that sufficient financing will be available when needed to allow us to continue as a going concern. The perception that we may not be able to continue as a going concern may also make it more difficult to operate our business due to concerns about our ability to meet our contractual obligations.

If we are unable to secure additional capital in the short term, we may be required to further curtail our business initiatives and take additional measures to reduce costs in order to conserve our cash in amounts sufficient to sustain operations and meet our obligations. to the accompanying financial statements do not include any adjustments that may be necessary should we be unable to continue as a going concern.

We have generated significant losses to date and expect to continue to incur significant operating losses. To date, our revenue from operations has been insufficient to support our operational activities and has been supplemented by the proceeds from the issuance of securities. There is no guarantee that additional equity, debt or other funding will be available to us on acceptable terms, or at all.

We have not been able to access the operating capital available under the Strata Purchase Agreement because current market conditions, including the low trading price and limited trading volume of our Class A Common Stock, have prevented us from satisfying the contractual conditions required for draws under that agreement.

Pursuant to the terms of a Strata Purchase Agreement (the “ Strata Purchase Agreement ”) dated October 13, 2024 with ClearThink Capital Partners, LLC (“ ClearThink ”), as amended and as supplemented by that certain Supplement to Strata Purchase Agreement dated as of October 13, 2023 with ClearThink (the “ Strata Supplement ,” together, with the Strata Purchase Agreement, the “ Purchase Agreement ”), ClearThink has agreed to purchase up to $5.0 million of shares of our Class A Common Stock over a 24-month period. Despite having an effective registration statement, we have not been able to access the operating capital available under the Strata Purchase Agreement because current market conditions, including the low trading price and limited trading volume of our Class A Common Stock, have prevented us from satisfying the contractual conditions required for puts under that agreement. A continuation of these market conditions could prevent us from accessing the capital we need to continue our operations, which could have an adverse effect on our business.

We have a substantial amount of intangible assets and goodwill and we have been, and may in the future be, required to write down the value of our intangible assets due to impairment, which could have a material adverse effect on our business, financial condition and results of operations.

We have a substantial amount of intangible assets and goodwill. We test the carrying value of intangible assets and goodwill for impairment at least annually and whenever events or circumstances indicate the carrying value may not be recoverable. Events and conditions that could result in impairment in the value of our intangible assets and goodwill include, but are not limited to, decisions to exit certain lines of business, significant negative industry or economic trends, significant decline in our stock price for a sustained period of time, significant decline in market capitalization relative to net book value, limited funding that could delay expansion efforts, and significant changes in the manner of use of the assets or the strategy for our overall business. The estimates and assumptions about future results of operations and cash flows made in connection with the impairment testing could differ from future actual results of operations and cash flows.

Future asset impairment charges could arise as a result of changes in our business strategy or changes in the intention to use certain assets. Any resulting impairment charge, although non-cash, could have a material adverse effect on our business, financial condition and results of operations.

Recent and future management changes and any inability to attract and retain qualified management and other key personnel, could impair our ability to implement our business plan and materially adversely impact our business, results of operations and financial condition.

We have experienced a number of recent changes to our senior management team, including the resignation of Mark White, our former Interim Chief Executive Officer, the appointment of Seamus Lagan, our current Chief Executive Officer, and the resignation of our former Chief Financial Officer, Sylwia Haumann, and the appointment of Celene Grant, our current Chief Financial Officer. There may be additional resignations and appointments in our senior management team in the future.

We believe that our future success is highly dependent on the efforts of Mr. Lagan. At present, we do not maintain key-man life insurance policies for him or for any key personnel. Changes in our senior management and uncertainty regarding any future changes may disrupt our operations and impair our ability to recruit and retain other needed personnel. Any such disruption or impairment could have an adverse effect on our business.

If Mr. Lagan and other key personnel were to depart, it would be important that we attract and retain qualified managers promptly and develop and implement an effective succession plan. We would expect to face significant competition in attracting experienced executives and other key personnel, and there can be no assurance that we will be able to do so. Depending on the circumstances of any future management departures, it is also possible that we will be required to pay significant severance, adversely impacting our financial condition.

Our future success depends in large part on the continued participation in the business of Seamus Lagan, our Chief Executive Officer, which cannot be ensured or guaranteed.

Mr. Lagan will be instrumental in shaping our vision, strategic direction and execution priorities. There can be no assurance that Mr. Lagan will continue to work for us. Mr. Lagan’s departure from service with the Company could materially adversely impact our business.

We expect our revenue and results of operations to fluctuate on a quarterly and annual basis.

Our revenue and results of operations could vary significantly from period-to-period and may fail to match expectations as a result of a variety of factors, some of which are outside of our control. As a result of the potential variations in our revenue and results of operations, period-to-period comparisons may not be meaningful and the results of any one period should not be relied on as an indication of future performance. In addition, our results of operations may not meet the expectations of investors or public market analysts who follow our Company, which may adversely impact our stock price.

Changes in general economic conditions could have a material adverse impact on our business.

Changes in general economic conditions, including, for example, interest rates, investor sentiment, changes specifically affecting the insurance industry or biotechnology industry, competition, technological developments, political and diplomatic events, tax laws, and other factors not known to us today, could substantially and materially adversely impact our business. For example, changes in interest rates may increase our cost of capital and ability to raise capital and have a corresponding adverse impact on our operating results. While we may engage in certain hedging activities to mitigate the impact of these changes, none of these conditions are or will be within our control. Changes in general economic conditions may also negatively impact demand for our products and services.

If we are unable to maintain effective internal control over financial reporting and disclosure controls and procedures, the accuracy and timing of our financial reporting may be adversely affected.

We are required to comply with Section 404 of the Sarbanes-Oxley Act, which requires management assessments of the effectiveness of internal control over financial reporting and disclosure controls and procedures.

Based on the evaluation of our internal controls over financial reporting, we concluded that such controls were not effective as of December 31, 2025. In addition, based on the evaluation of our disclosure controls and procedures as of December 31, 2025, we concluded such controls were not effective. Due to the current size of our Company and our limited personnel, we may not be able to maintain effective internal control over financial reporting and disclosure controls and procedures in the future.

We can give no assurance that we will be able to maintain effective internal control over financial reporting and disclosure controls and procedures, or that no “material weaknesses” in our internal control over financial reporting will be identified in the future. If we encounter “material weaknesses” in our internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis, it could lead to errors in our financial statements that could result in a restatement of our financial statements and cause us to fail to meet our reporting obligations. Further, If we are unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately and to prepare financial statements within required time periods could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements, restrict access to capital markets and adversely impact our stock price.

We have substantial indebtedness many of which are in payment default, which may affect our operational and financial flexibility.

We currently have, and will likely continue to have, a substantial amount of indebtedness. Our indebtedness could, among other things, make it more difficult for us to satisfy our debt and other obligations, require us to use a large portion of our cash flow from operations to repay and service our debt or otherwise create liquidity problems, limit our flexibility to adjust to market conditions and place us at a competitive disadvantage. Restrictive covenants in the agreements governing our indebtedness may adversely affect us.

Our ability to meet our obligations depends on our future performance and capital-raising activities, which will be affected by financial, business, economic and other factors, many of which are beyond our control. If our cash flow and capital resources prove inadequate to allow us to pay the principal and interest on our debt and meet our other obligations, we could face substantial liquidity problems and might be required to dispose of material assets or operations, restructure or refinance our debt, which we may be unable to do on acceptable terms, and forego attractive business opportunities. In addition, the terms of our existing or future debt agreements may restrict us from pursuing any of these alternatives.

Risks Related to Our Healthcare Operations

Our results of operations may be adversely affected if the Patient Protection and Affordable Care Act (“ACA”) is repealed, replaced or otherwise changed.

The ACA has increased the number of people with health care insurance. It also has reduced Medicare and Medicaid reimbursements. Numerous proposals continue to be discussed to repeal, amend or replace the law. We cannot predict whether any such repeal, amend or replace proposals, or any parts of them, will become law and, if they do, what their substance or timing will be. There is uncertainty whether, when and how the ACA may be changed, what alternative provisions, if any, will be enacted, the timing of enactment and implementation of any alternative provisions and the impact of any alternative provisions on providers as well as other healthcare industry participants. Efforts to repeal or change the ACA or implement other initiatives intended to reform healthcare delivery and financial systems may have an adverse effect on our business and results of operations.

Healthcare plans have taken steps to control the utilization and reimbursement of healthcare services.

We also face efforts by non-governmental third-party payers, including healthcare plans, to reduce utilization and reimbursement for healthcare services.

The healthcare industry has experienced a trend of consolidation among healthcare insurance plans and payers, resulting in fewer but larger insurance plans with significant bargaining power to negotiate fee arrangements with healthcare providers. These healthcare plans, and independent physician associations, may demand that providers accept discounted fee structures or assume all or a portion of the financial risk associated with providing services to their members through capped payment arrangements. There are also an increasing number of patients enrolling in consumer driven products and high-deductible plans that involve greater patient cost-sharing.

The increased consolidation among healthcare plans and payers increases the potential adverse impact of not being, or ceasing to be, a contracted provider with any such insurer. The ACA includes provisions, including ones regarding the creation of healthcare exchanges, which may encourage healthcare insurance plans to increase exclusive contracting.

We expect continuing efforts to reduce reimbursements, to impose more stringent cost controls and to reduce utilization of services. These efforts, including future changes in third-party payer rules, practices and policies or ceasing to be a contracted provider to many healthcare plans, have had and may continue to have a material adverse effect on our business.

Some of our operations are subject to federal and state laws prohibiting “kickbacks” and other laws designed to prohibit payments for referrals and eliminate healthcare fraud.

Federal and state anti-kickback and similar laws prohibit payment, or offers of payment, in exchange for referrals of products and services for which reimbursement may be made by Medicare or other federal and state healthcare programs. Some state laws contain similar prohibitions that apply without regard to the payer of reimbursement for the services. Under a federal statute, known as the “Stark Law” or “self-referral” prohibition, physicians, subject to certain exceptions, are prohibited from referring their Medicare or Medicaid program patients to providers with which the physicians or their immediate family members have a financial relationship, and the providers are prohibited from billing for services rendered in violation of Stark Law referral prohibitions. Violations of the federal Anti-Kickback Law and Stark Law may be punished by civil and criminal penalties, and/or exclusion from participation in federal health care programs, including Medicare and Medicaid. States may impose similar penalties. The ACA significantly strengthened provisions of the Federal False Claims Act and Anti-Kickback Law provisions, and other health care fraud provisions, leading to the possibility of greatly increased qui tam suits by private citizen “relators” for perceived violations of these laws. There can be no assurance that our activities will not come under the scrutiny of regulators and other government authorities or that our practices will not be found to violate applicable laws, rules and regulations or prompt lawsuits by private citizen relators under federal or state false claims laws. A qui tam lawsuit has been filed against the Company alleging violations of the False Claims Act. See “ Legal Proceedings ”.

Federal officials responsible for administering and enforcing the healthcare laws and regulations have made a priority of eliminating healthcare fraud. For example, the ACA includes significant new fraud and abuse measures, including required disclosures of financial arrangements with physician customers, lower thresholds for violations and increased potential penalties for violations. Federal funding available for combating health care fraud and abuse generally has increased. While we seek to conduct our business in compliance with all applicable laws and regulations, many of the laws and regulations applicable to our business, particularly those relating to billing and reimbursement of services and those relating to relationships with physicians, hospitals and patients, contain language that has not been interpreted by courts. We must rely on our interpretation of these laws and regulations based on the advice of our counsel and regulatory or law enforcement authorities may not agree with our interpretation of these laws and regulations and may seek to enforce legal remedies or penalties against us for violations.

From time to time we may need to change our operations, particularly pricing or billing practices, in response to changing interpretations of these laws and regulations, or regulatory or judicial determinations with respect to these laws and regulations. These occurrences, regardless of their outcome, could damage our reputation and harm important business relationships that we have with healthcare providers, payers and others. Furthermore, if a regulatory or judicial authority finds that we have not complied with applicable laws and regulations, we would be required to refund amounts that were billed and collected in violation of such laws and regulations. In addition, we may voluntarily refund amounts that were alleged to have been billed and collected in violation of applicable laws and regulations. In either case, we could suffer civil and criminal damages, fines and penalties, exclusion from participation in governmental healthcare programs and the loss of licenses, certificates and authorizations necessary to operate our business, as well as incur liabilities from third-party claims, all of which could harm our operating results and financial condition.

Moreover, regardless of the outcome, if we or physicians or other third parties with whom we do business are investigated by a regulatory or law enforcement authority we could incur substantial costs, including legal fees, and our management may be required to divert a substantial amount of time to an investigation.

To enhance compliance with applicable health care laws, and mitigate potential liability in the event of noncompliance, regulatory authorities, such as the OIG, have recommended the adoption and implementation of a comprehensive health care compliance program that generally contains the elements of an effective compliance and ethics program described in Section 8B2.1 of the United States Sentencing Commission Guidelines Manual, and for many years the OIG has made available a model compliance program. In addition, certain states require that health care providers that engage in substantial business under the state Medicaid program have a compliance program that generally adheres to the standards set forth in the Model Compliance Program. Also, under the ACA, HHS will require suppliers, such as the Company, to adopt, as a condition of Medicare participation, compliance programs that meet a core set of requirements. While we have adopted, or are in the process of adopting, healthcare compliance and ethics programs that generally incorporate the OIG’s recommendations, and training our applicable employees in such compliance, having such a program can be no assurance that we will avoid any compliance issues.

We conduct our business in a heavily regulated industry and changes in regulations or violations of regulations could, directly or indirectly, harm our operating results and financial condition.

The healthcare industry is highly regulated and there can be no assurance that the regulatory environment in which we operate will not change significantly and adversely in the future. Areas of the regulatory environment that may affect our ability to conduct business include, without limitation:

federal and state laws applicable to billing and claims payment;

federal and state laws relating to licensure;

federal and state anti-kickback laws;

federal and state false claims laws;

federal and state self-referral and financial inducement laws, including the federal physician anti-self-referral law, or the Stark Law;

coverage and reimbursement levels by Medicare and other governmental payors and private insurers;

HIPAA, along with the revisions to HIPAA as a result of the Health Information Technology for Economic and Clinical Health Act (“ HITECH ”), and analogous state laws;

federal and state regulation of privacy, security, electronic transactions and identity theft;

federal, state and local laws governing the handling, transportation and disposal of medical and hazardous waste;

Occupational Safety and Health Administration rules and regulations;

changes to laws, regulations and rules as a result of the ACA; and

changes to other federal, state and local laws, regulations and rules, including tax laws.

These laws and regulations are extremely complex and, in many instances, there are no significant regulatory or judicial interpretations of these laws and regulations. Any determination that we have violated these laws or regulations, or the public announcement that we are being investigated for possible violations of these laws or regulations, could harm our operating results and financial condition. In addition, a significant change in any of these laws or regulations may require us to change our business model in order to maintain compliance with these laws or regulations, which could harm our operating results and financial condition.

Failure to comply with complex federal and state laws and regulations related to submission of claims for services can result in significant monetary damages and penalties and exclusion from the Medicare and Medicaid programs.

We are subject to extensive federal and state laws and regulations relating to the submission of claims for payment for services, including those that relate to coverage of our services under Medicare, Medicaid and other governmental health care programs, the amounts that may be billed for our services and to whom claims for services may be submitted.

Our failure to comply with applicable laws and regulations could result in our inability to receive payment for our services or result in attempts by third-party payers, such as Medicare and Medicaid, to recover payments from us that have already been made. Submission of claims in violation of certain statutory or regulatory requirements can result in penalties, including substantial civil money penalties for each item or service billed to Medicare in violation of the legal requirement, and exclusion from participation in Medicare and Medicaid. Government authorities may also assert that violations of laws and regulations related to submission or causing the submission of claims violate the federal False Claims Act (“ FCA ”) or other laws related to fraud and abuse, including submission of claims for services that were not medically necessary. Violations of the FCA could result in enormous economic liability. The FCA provides that all damages are trebled. For example, we could be subject to FCA liability if it was determined that the services we provided were not medically necessary and not reimbursable, particularly if it were asserted that we contributed to the physician’s referrals of unnecessary services to us. It is also possible that the government could attempt to hold us liable under fraud and abuse laws for improper claims submitted by an entity for services that we performed if we were found to have knowingly participated in the arrangement that resulted in submission of the improper claims.

Our facilities are subject to potential claims for professional liability, including existing or potential claims based on the acts or omissions of third parties, which claims may not be covered by insurance.

Our facilities are subject to potential claims for professional liability (medical malpractice) in connection with their operations, as well as potentially acquired or discontinued operations. To cover such claims, professional malpractice liability insurance and general liability insurance are maintained in amounts believed to be sufficient for operations, although some claims may exceed the scope or amount of the coverage in effect. The assertion of a significant number of claims, either within a self-insured retention (deductible) or individually or in the aggregate in excess of available insurance, could have a material adverse effect on our results of operations or financial condition. Premiums for professional liability insurance have historically been volatile, and we cannot assure you that professional liability insurance will continue to be available on terms acceptable to us, if at all. The operations of hospitals also depend on the professional services of physicians and other trained healthcare providers and technicians in the conduct of their respective operations, including independent laboratories and physicians rendering diagnostic and medical services. There can be no assurance that any legal action stemming from the act or omission of a third-party provider of healthcare services would not be brought against one of our hospitals, resulting in significant legal expenses in order to defend against such legal action or to obtain a financial contribution from the third party whose acts or omissions occasioned the legal action.

Our success depends on our ability to attract and retain qualified healthcare professionals. A shortage of qualified healthcare professionals could weaken our ability to deliver healthcare services.

Our operations are dependent on the efforts, ability and experience of healthcare professionals, such as physicians, nurses, therapists, pharmacists and lab technicians. Each facility’s success has been, and will continue to be, influenced by its ability to attract and retain these skilled employees. A shortage of healthcare professionals, the loss of some or all of its key employees or the inability to attract or retain enough qualified healthcare professionals could cause the operating performance of one or more of our facilities to decline.

A significant portion of our net revenues is dependent on Medicare and Medicaid payments and possible reductions in Medicare or Medicaid payments or the implementation of other measures to reduce reimbursements may reduce our revenues.

A significant portion of our net revenues is derived from the Medicare and Medicaid programs, which are highly regulated and subject to frequent and substantial changes. Previous legislative changes have resulted in, and future legislative changes may result in, limitations on and reduced levels of payment and reimbursement for a substantial portion of hospital procedures and costs.

Future healthcare legislation or other changes in the administration or interpretation of governmental healthcare programs may have a material adverse effect on our consolidated business, financial condition, results of operations or prospects.

Failure to timely or accurately bill for our services could have a material adverse effect on our business.

Billing for medical services is extremely complicated and is subject to extensive and non-uniform rules and administrative requirements. Depending on the billing arrangement and applicable law, we bill various payers, such as patients, insurance companies, Medicare, Medicaid, physicians, hospitals and employer groups. Changes in laws and regulations could increase the complexity and cost of our billing process. Additionally, auditing for compliance with applicable laws and regulations as well as internal compliance policies and procedures adds further cost and complexity to the billing process.

Missing, incomplete, or incorrect information adds complexity to and slows the billing process, creates backlogs of unbilled services, and generally increases the aging of accounts receivable and bad debt expense. Failure to timely or correctly bill may lead to our not being reimbursed for our services or an increase in the aging of our accounts receivable, which could adversely affect our results of operations and cash flows. Failure to comply with applicable laws relating to billing or even having to pay back amounts incorrectly billed and collected could lead to various penalties, including: (1) exclusion from participation in CMS and other government programs; (2) asset forfeitures; (3) civil and criminal fines and penalties; and (4) the loss of various licenses, certificates and authorizations necessary to operate our business, any of which could have a material adverse effect on our results of operations or cash flows.

There have been times when our accounts receivable have increased at a greater rate than revenue growth and, therefore, have adversely affected our cash flows from operations. We have taken steps to implement systems and processing changes intended to improve billing procedures and related collection results. However, we cannot assure that our ongoing assessment of accounts receivable will not result in the need for additional provisions. Such additional provisions, if implemented, could have a material adverse effect on our operating results.

Our operations may be adversely impacted by the effects of extreme weather conditions, natural disasters such as hurricanes and earthquakes, hostilities or acts of terrorism and other criminal activities.

Our operations are always subject to adverse impacts resulting from extreme weather conditions, natural disasters, hostilities or acts of terrorism or other criminal activities. Such events may result in a temporary decline in the number of patients who seek our services or in our employees’ ability to perform their job duties. In addition, such events may temporarily interrupt our ability to provide our services. The occurrence of any such event and/or a disruption of our operations as a result may adversely affect our results of operations.

Increased competition, including price competition, could have a material adverse impact on our net revenues and profitability.

We operate in a business that is characterized by intense competition. Our major competitors include large national hospitals that possess greater name recognition, larger customer bases, and significantly greater financial resources and employ substantially more personnel than we do. Many of our competitors have long established relationships. Although our hospitals operate in communities where they are currently the only general acute care hospital, they face substantial competition from other hospitals in their respective regions. Although these competing hospitals may be many miles away, patients in these markets may travel to these competing hospitals as a result of local physician referrals, managed care plan incentives or personal choices. We cannot assure you that we will be able to compete successfully with such entities in the future.

The healthcare business is intensely competitive both in terms of price and service. Pricing of services is often one of the most significant factors used by patients, health care providers and third-party payers in selecting a provider. As a result of the healthcare industry undergoing significant consolidation, larger providers are able to increase cost efficiencies. This consolidation results in greater price competition. We may be unable to increase cost efficiencies sufficiently, if at all, and as a result, our net earnings and cash flows could be negatively impacted by such price competition. We may also face competition from companies that do not comply with existing laws or regulations or otherwise disregard compliance standards in the industry. Additionally, we may also face changes in fee schedules, competitive bidding for services or other actions or pressures reducing payment schedules as a result of increased or additional competition. Additional competition, including price competition, could have a material adverse impact on our net revenues and profitability.

Sustained inflation and staffing shortages could increase our costs of operations.

The healthcare industry is very labor intensive, and salaries and benefits are subject to inflationary pressures, as are supply and other costs. In particular, like others in the healthcare industry, we continue to experience a shortage of nurses and other clinical staff and support personnel, which was exacerbated by the COVID-19 pandemic. This staffing shortage may require us to further enhance wages and benefits to recruit and retain nurses and other clinical staff and support personnel or require us to hire expensive temporary personnel. Furthermore, we are unable to predict whether recent inflationary spikes, which were initially thought to be transitory, labor shortages in selected markets, and supply chain issues will continue for an extended period of time. Substantially increased costs of personnel, goods, and services could have an adverse effect on our results of operations if we are unable to pass such costs along to patients and payors. The concentration of our patients in persons for whom the cost of treatment is paid for under government programs could substantially limit our ability to pass through such costs.

Failure to maintain the security of patient-related information or compliance with security requirements could damage the Company’s reputation with patients and cause it to incur substantial additional costs and to become subject to litigation.

Pursuant to HIPAA and certain similar state laws, we must comply with comprehensive privacy and security standards with respect to the use and disclosure of protected health information. Under the HITECH amendments to HIPAA, HIPAA was expanded to require certain data breach notifications, to extend certain HIPAA privacy and security standards directly to business associates, to heighten penalties for noncompliance and to enhance enforcement efforts. If the Company does not comply with existing or new laws and regulations relating to protecting the privacy and security of personal or health information, it could be subject to monetary fines, civil penalties or criminal sanctions.

The Company receives certain personal and financial information about its patients. In addition, the Company depends upon the secure transmission of confidential information over public networks, including information permitting cashless payments. While we take reasonable and prudent steps to protect this information, a compromise in the Company’s security systems that results in patient personal information being obtained by unauthorized persons or the Company’s failure to comply with security requirements for financial transactions could adversely affect the Company’s reputation with its customers and others, as well as the Company’s results of operations, financial condition and liquidity. It could also result in litigation against the Company or the imposition of penalties.

Failure of the Company to comply with emerging electronic transmission standards could adversely affect our business.

The failure of our IT systems to keep pace with technological advances may significantly reduce our revenues or increase our expenses. Public and private initiatives to create healthcare information technology (“ HCIT ”) standards and to mandate standardized clinical coding systems for the electronic exchange of clinical information could require costly modifications to our existing HCIT systems. While we do not expect HCIT standards to be adopted or implemented without adequate time to comply, if we fail to adopt or delay in implementing HCIT standards, we could lose customers and business opportunities.

Compliance with the HIPAA security regulations and privacy regulations may increase the Company’s costs.

The HIPAA privacy and security regulations, including the expanded requirements under HITECH, establish comprehensive federal standards with respect to the use and disclosure of protected health information by health plans, healthcare providers and healthcare clearinghouses, in addition to setting standards to protect the confidentiality, integrity and security of protected health information. The regulations establish a complex regulatory framework on a variety of subjects, including:

the circumstances under which the use and disclosure of protected health information are permitted or required without a specific authorization by the patient, including but not limited to treatment purposes, activities to obtain payments for the Company’s services, and its healthcare operations activities;

a patient’s rights to access, amend and receive an accounting of certain disclosures of protected health information;

the content of notices of privacy practices for protected health information;

administrative, technical and physical safeguards required of entities that use or receive protected health information; and

the protection of computing systems maintaining Electronic Personal Health Information (“ ePHI ”).

The Company has implemented policies and procedures related to compliance with the HIPAA privacy and security regulations, as required by law. The privacy and security regulations establish a “floor” and do not supersede state laws that are more stringent. Therefore, the Company is required to comply with both federal privacy and security regulations and varying state privacy and security laws. In addition, for healthcare data transfers from other countries relating to citizens of those countries, the Company may also be required to comply with the laws of those other countries. The federal privacy regulations restrict the Company’s ability to use or disclose patient identifiable data, without patient authorization, for purposes other than payment, treatment or healthcare operations (as defined by HIPAA), except for disclosures for various public policy purposes and other permitted purposes outlined in the privacy regulations. HIPAA, as amended by HITECH, provides for significant fines and other penalties for wrongful use or disclosure of protected health information in violation of the privacy and security regulations, including potential civil and criminal fines and penalties. Due to the enactment of HITECH and an increase in the amount of monetary financial penalties, government enforcement has also increased. It is not possible to predict what the extent of the impact on business will be, other than heightened scrutiny and emphasis on compliance. If the Company does not comply with existing or new laws and regulations related to protecting the privacy and security of health information it could be subject to significant monetary fines, civil penalties or criminal sanctions. In addition, other federal and state laws that protect the privacy and security of patient information may be subject to enforcement and interpretations by various governmental authorities and courts resulting in complex compliance issues. For example, the Company could incur damages under state laws pursuant to an action brought by a private party for the wrongful use or disclosure of confidential health information or other private personal information.

Health care reform and related programs (e.g. Health Insurance Exchanges), changes in government payment and reimbursement systems, or changes in payer mix, including an increase in capitated reimbursement mechanisms and evolving delivery models, could have a material adverse impact on the Company’s net revenues, profitability and cash flow.

Our services are billed to private patients, Medicare, Medicaid, commercial clients, managed care organizations (“ MCOs ”) and third-party insurance companies. Bills may be sent to different payers depending on the medical insurance benefits of a particular patient. Increases in the percentage of services billed to government and managed care payers could have an adverse impact on the Company’s net revenues.

A portion of the third-party insurance fee-for-service revenues are collectible from patients in the form of deductibles, copayments and coinsurance. As patient cost-sharing increases, collectability may be impacted.

In addition, Medicare and Medicaid and private insurers have increased their efforts to control the cost, utilization and delivery of health care services. Measures to regulate health care delivery have resulted in reduced prices, added costs and decreased utilization as well as increased complexity and new regulatory and administrative requirements. Changes to, or repeal of, the ACA, the health care reform legislation passed in 2010, also may continue to affect coverage, reimbursement and utilization of services, as well as administrative requirements, in ways that are currently unpredictable.

The Company expects efforts to impose reduced reimbursement, more stringent payment policies and utilization and cost controls by government and other payers to continue. If the Company cannot offset additional reductions in the payments it receives for its services by reducing costs, increasing the number of patients treated and/or introducing new procedures, it could have a material adverse impact on the Company’s net revenues, profitability and cash flows.

As an employer, health care reform legislation also contains numerous regulations that will require the Company to implement significant process and record keeping changes to be in compliance. These changes increase the cost of providing healthcare coverage to employees and their families. Given the limited release of regulations to guide compliance, as well as potential changes to or repeal of the ACA, the exact impact to employers including the Company is uncertain.

Adverse results in material litigation matters or governmental inquiries could have a material adverse effect upon the Company’s business and financial condition.

The Company may become subject in the ordinary course of business to material legal action related to, among other things, professional liability, contracts and employee-related matters, as well as inquiries and requests for information from governmental agencies and bodies and Medicare or Medicaid payors requesting comment and/or information on allegations of billing irregularities, billing and pricing arrangements, privacy practices and other matters that are brought to their attention through billing audits or third parties. The healthcare industry is subject to substantial Federal and state government regulation and audit. Legal actions could result in substantial monetary damages as well as damage to the Company’s reputation with customers, which could have a material adverse effect on its business.

Failure in the Company’s information technology systems or delays or failures in the development and implementation of updates or enhancements to those systems could significantly delay billing and otherwise disrupt the Company’s operations or patient relationships.

The Company’s business and patient relationships depend, in part, on the continued performance of its information technology systems. Despite network security measures and other precautions, the Company’s information technology systems are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptions. Sustained system failures or interruption of the Company’s systems in one or more of its operations could disrupt the Company’s ability to conduct its business. Breaches with respect to protected health information could result in violations of HIPAA and analogous state laws and risk the imposition of significant fines and penalties. Failure of the Company’s information technology systems could adversely affect the Company’s business, profitability and financial condition.

Increasing health insurance premiums and co-payments or high-deductible health plans may cause individuals to forgo health insurance and avoid medical attention, either of which may reduce demand for our products and services.

Health insurance premiums, co-payments and deductibles have generally increased in recent years. These increases may cause individuals to forgo health insurance, as well as medical attention. This behavior may reduce demand for services at our hospitals.

Our healthcare operations are dependent on the local economies and the surrounding areas in which they operate and are concentrated in Tennessee. A significant deterioration in those economies could cause a material adverse effect on our businesses.

Each rural facility operation is dependent upon the local economy where it is located. A significant deterioration in that economy would negatively impact the demand for the facility’s services, as well as the ability of patients and other payers to pay for service as rendered. Our net revenues are particularly sensitive to regulatory and economic changes in Tennessee. Any change in the current demographic, economic, competitive or regulatory conditions in the state could have an adverse effect on our business, financial condition or results of operations. Changes to the Medicaid program or other health care laws or regulations in Tennessee could also have an adverse effect.

Risks Related to Our Life Science Services

Our Life Science Services operations are subject to government regulation, and failure to comply with applicable laws and regulations could adversely affect our business.

Vector’s operations are subject to a variety of federal, state, local, and international laws and regulations governing the handling, transportation, import, and export of biological materials, workplace safety requirements, and privacy and data protection.

These regulatory frameworks include, among others:

regulations governing the transportation of biological materials issued by the U.S. Department of Transportation

International Air Transport Association regulations governing the shipment of biological substances by air

import permit and inspection requirements administered by the Centers for Disease Control and Prevention and other regulatory authorities

occupational safety requirements administered by the Occupational Safety and Health Administration

federal and state laws governing privacy and data protection

Compliance with these requirements may be complex and may require ongoing monitoring of regulatory developments. Failure to comply with applicable laws and regulations could result in fines, penalties, shipment delays, operational restrictions, or reputational harm, any of which could adversely affect our business, financial condition, and results of operations.

Vector’s international sourcing operations subject us to additional regulatory, legal, and operational risks.

Vector sources certain biological specimens through relationships with clinical institutions and specimen providers located outside the United States, including partners in India and Latin America.

International sourcing activities may expose us to risks, including:

compliance with differing regulatory requirements in multiple jurisdictions

export controls or import permit requirements affecting biological materials

regulatory requirements relating to ethical sourcing and donor consent

limitations on the transfer of biological materials across national borders

trade restrictions, tariffs, or other barriers to international commerce

political or economic instability in foreign jurisdictions

currency exchange fluctuations

difficulties enforcing agreements or collecting receivables in foreign jurisdictions

language and cultural differences that may complicate business operations

Any failure to effectively manage these risks could limit our ability to source biological specimens internationally or increase our operating costs.

Our business depends on relationships with specimen providers, and disruptions to those relationships could adversely affect our operations.

Vector’s business model relies on establishing and maintaining relationships with collection centers, hospitals, laboratories, and other specimen providers that supply biological materials used in research. If these relationships are disrupted or if specimen providers fail to comply with applicable legal, ethical, or quality standards, our ability to source biological specimens could be adversely affected. In addition, competition for access to certain types of specimens, particularly rare-disease samples, may increase the cost of obtaining them or limit the availability of specimens needed to fulfill customer requests. If we are unable to secure sufficient specimen supply, we may be unable to meet customer demand, which could adversely affect our revenues and reputation.

Vector operates in a competitive biospecimen sourcing market.

The market for biological specimens used in research is competitive and fragmented. Participants in this market include specialized biospecimen suppliers, contract research organizations, academic medical centers, biobanks, and research institutions. Some of these competitors may have greater financial resources, larger specimen inventories or more established relationships with research institutions and pharmaceutical companies. In addition, some research organizations may choose to source specimens directly through clinical institutions rather than through third-party suppliers. If we are unable to compete effectively with other specimen suppliers, our ability to attract and retain customers may be adversely affected.

Ethical or compliance failures in specimen sourcing could harm our reputation.

The sourcing of human biological specimens involves ethical, legal and regulatory considerations, including obtaining appropriate donor consent and protecting donor privacy. Vector relies on specimen providers and clinical partners to obtain specimens in accordance with applicable laws, institutional policies, and ethical guidelines. If a specimen provider fails to comply with applicable consent requirements, privacy protections, or other regulatory obligations, Vector could face reputational harm, regulatory scrutiny, or legal claims. Even allegations of improper specimen sourcing practices could damage our relationships with customers, partners, and regulators.

Quality control issues could adversely affect our business.

Vector’s customers rely on the quality and integrity of biological specimens supplied for research purposes. Specimens must be properly handled, preserved, labeled, and transported in order to maintain their scientific usefulness. Quality failures, including specimen misidentification, contamination, improper storage conditions, or shipping delays, could result in unusable specimens, customer dissatisfaction, or contractual disputes. Maintaining quality standards requires ongoing investment in training, quality assurance procedures, and logistics management.

We may face liability related to the specimens we distribute.

Vector distributes biological specimens to pharmaceutical, biotechnology, device manufacturers, and research institutions. If specimens are alleged to have been improperly handled, mislabeled, or otherwise defective, Vector could face breach-of-contract claims, product-liability claims, or other legal disputes. Although we maintain insurance coverage intended to address certain liabilities, such insurance may not fully cover all potential claims. Any significant claim or series of claims could result in substantial costs and reputational harm.

Privacy and data protection laws may apply to aspects of our business.

Vector may receive certain information associated with biological specimens supplied through its partners. Applicable privacy laws may govern the handling of personal information associated with such specimens. These laws may include the Health Insurance Portability and Accountability Act in the United States, as well as various state and international data protection regulations. Vector generally seeks to limit the receipt of personally identifiable information and works with de-identified specimen data whenever possible. Failure to comply with applicable privacy laws could result in regulatory enforcement actions, fines or reputational harm.

We recently acquired Vector and may not be able to successfully integrate its operations or realize the anticipated benefits of the acquisition.

We acquired Vector on September 19, 2025. The acquisition of Vector, and any future acquisitions in the biospecimen sourcing sector, involve numerous risks, including:

difficulties integrating operations, systems, technologies, and personnel;

diversion of management’s attention from other business concerns;

failure to retain key employees, customers, or suppliers of the acquired business;

assumption of unknown or contingent liabilities;

exposure to legal claims arising from the past operations of the acquired business;

failure to realize anticipated synergies, cost savings, or revenue growth;

difficulties in applying our internal controls and procedures to the acquired business;

impairment charges if the acquisition does not perform as expected; and

failure to achieve the revenue targets required for earnout payments, or disputes regarding earnout calculations.

If we are unable to successfully integrate Vector’s operations or achieve the anticipated benefits of the acquisition, our business, financial condition and results of operations could be materially adversely affected.

The sellers of Vector have a right to repurchase the business under certain circumstances, which could result in the loss of our investment.

Pursuant to the Stock Purchase Agreement pursuant to which we acquired Vector, the sellers have the right, but not the obligation, to repurchase the shares of Vector under certain limited circumstances at fair market value as determined by a third party and subject to a floor. If the sellers exercise this repurchase right, we would lose our investment in Vector and the anticipated benefits of the acquisition, which could have a material adverse effect on our business, financial condition and results of operations.

We may be required to pay significant earnout consideration to the sellers of Vector, which could adversely affect our financial condition and dilute our existing stockholders.

Pursuant to the Stock Purchase Agreement, we may be required to issue to the sellers of Vector up to 80,000 shares of Series E Preferred Stock (with a stated value of $25.00 per share, or $2,000,000 in the aggregate) if Vector achieves at least $4,000,000 of Qualifying Revenue during the 12-month period between the first and second anniversary of the closing. At December 31, 2025, based on current financial projections, we have recorded $500,000 of this earnout as a contingent purchase price obligation in our consolidated financial statements. In addition, if a Change of Control of the Company occurs prior to the two-year anniversary of the closing, all of the up to 80,000 shares of Series E Preferred Stock will be issued to the sellers. Any additional potential earnout obligation could require us to issue additional shares of preferred stock, which would dilute our existing stockholders and could adversely affect our financial condition. In addition, the earnout obligation could create pressure to achieve revenue targets that may not be achievable or may require us to take actions that are not in the long-term best interests of the Company.

Our business relies on third-party logistics providers.

Vector relies on third-party shipping and logistics providers to transport biological specimens to customers. Disruptions affecting transportation providers, including weather events, supply chain disruptions, labor issues or operational failures, could delay specimen shipments or prevent timely delivery to customers. Delays in specimen delivery may render specimens unusable for research purposes and could result in lost revenue or damage to customer relationships.

We may face customer and supplier concentration risk.

A limited number of customers and suppliers may account for a significant portion of Vector’s revenues during certain periods. The loss of one or more significant customers or suppliers or a reduction in purchasing activity by those customers could adversely affect our revenues and operating results.

Our growth strategy may involve acquisitions.

We may pursue acquisitions of businesses that complement our Life Science Services segment.

Acquisitions involve risks, including:

integration challenges

diversion of management attention

retention of key employees or customers

assumption of unknown liabilities

If we are unable to successfully integrate acquired businesses or realize anticipated benefits, our financial performance could be adversely affected.

Our Life Science Services operations may require additional capital.

Expansion of our Life Science Services business may require additional investment, including investments in technology, logistics capabilities, and business development activities. If sufficient capital is not available on acceptable terms, our ability to expand the business may be limited.

Risks Related to Owning Our Securities

Our Common Stock is subject to the “penny stock” rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock cumbersome and may reduce the value of an investment in the stock.

Rule 15g-9 under the Exchange Act establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person’s account for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our common stock.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

Because the SEC imposes additional sales practice requirements on brokers who deal in our shares that are penny stocks, some brokers may be unwilling to trade them. This means that investors may have difficulty reselling their shares and may cause the price of the shares to decline.

Our shares of Common Stock qualify as penny stocks and are covered by Section 15(g) of the Exchange Act which imposes additional sales practice requirements on broker/dealers who sell our securities in this offering or in the aftermarket. In particular, prior to selling a penny stock, broker/dealers must give the prospective customer a risk disclosure document that: contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; contains a description of the broker/dealers’ duties to the customer and of the rights and remedies available to the customer with respect to violations of such duties or other requirements of Federal securities laws; contains a brief, clear, narrative description of a dealer market, including “bid” and “ask” prices for penny stocks and the significance of the spread between the bid and ask prices; contains the toll free telephone number for inquiries on disciplinary actions established pursuant to section 15(A)(i); defines significant terms used in the disclosure document or in the conduct of trading in penny stocks; and contains such other information, and is in such form (including language, type size, and format), as the SEC requires by rule or regulation. Further, for sales of our securities, the broker/dealer must make a special suitability determination and receive from you a written agreement before making a sale to you. Because of the imposition of the foregoing additional sales practices, it is possible that brokers will not want to make a market in our shares. This could prevent reselling of shares and may cause the price of the shares to decline.

Our stock may be traded infrequently and in low volumes, so you may be unable to sell your shares at or near the quoted bid prices if you need to sell your shares.

Until our common stock is listed on a national securities exchange such as the New York Stock Exchange or the Nasdaq, we expect our common stock to remain eligible for quotation on the OTC Markets, or on another over-the-counter quotation system. In those venues, however, the shares of our Common Stock may trade infrequently and in low volumes, meaning that the number of persons interested in purchasing our common shares at or near bid prices at any given time may be relatively small or non-existent. An investor may find it difficult to obtain accurate quotations as to the market value of our Common Stock or to sell his or her shares at or near bid prices or at all. In addition, if we fail to meet the criteria set forth in SEC regulations, various requirements would be imposed by law on broker-dealers who sell our securities to persons other than established customers and accredited investors. Consequently, such regulations may deter broker-dealers from recommending or selling our Common Stock, which may further affect the liquidity of our Common Stock. This would also make it more difficult for us to raise capital.

There currently is no active public market for our Common Stock and there can be no assurance that an active public market will ever develop. Failure to develop or maintain a trading market could negatively affect the value of our common stock and make it difficult or impossible for you to sell your shares.

There is currently no active public market for shares of our Common Stock, and one may never develop. Our Common Stock is quoted on the OTC Markets. The OTC Markets is a thinly traded market and lacks the liquidity of certain other public markets with which some investors may have more experience. We may not ever be able to satisfy the listing requirements for our Common Stock to be listed on a national securities exchange, which is often a more widely traded and liquid market. Some, but not all, of the factors which may delay or prevent the listing of our Common Stock on a more widely-traded and liquid market include the following: our stockholders’ equity may be insufficient; the market value of our outstanding securities may be too low; our net income from operations may be too low; our Common Stock may not be sufficiently widely held; we may not be able to secure market makers for our Common Stock; and we may fail to meet the rules and requirements mandated by the several exchanges and markets to have our Common Stock listed. Should we fail to satisfy the initial listing standards of the national exchanges, or our Common Stock is otherwise rejected for listing, and remains listed on the OTC Markets or is suspended from the OTC Markets, the trading price of our Common Stock could suffer and the trading market for our Common Stock may be less liquid and our common stock price may be subject to increased volatility, making it difficult or impossible to sell shares of our Common Stock.

The public market for our securities is volatile. This may affect not only the ability of our investors to sell their securities, but the price at which they can sell their securities.

Since the consummation of our business combination, the Class A Common Stock has traded as low as $0.0001 per share, and day-to-day trading has been volatile at times. This volatility may continue or increase in the future. The market price for the securities may be significantly affected by factors such as progress in the development of our technology, commercialization of our technology, variations in quarterly and yearly operating results, general trends in the life insurance industry, and other uncertainties further described in this section. Furthermore, recently the stock market has experienced extreme price and volume fluctuations that are unrelated or disproportionate to the operating performance of the affected companies, such as the market reactions to internet marketed ‘short squeezes’, the coronavirus outbreak and recent macroeconomic factors such as inflationary pressures and higher interest rates. Such broad market fluctuations may adversely affect the market price of our securities.

Our common stock is subject to substantial dilution by conversions or exercises of outstanding convertible preferred stock, convertible notes payable, common stock warrants and other securities into common stock.

The Company has outstanding convertible preferred stock, convertible notes payable, common stock warrants, and stock options. Conversions of the convertible preferred stock and convertible notes payable and exercise of the warrants could result in substantial dilution of our common stock and a decline in its market price. In addition, the terms of certain of convertible preferred stock and convertible notes payable issued by us provide for reductions in the per share conversion prices of the preferred stock and the per share exercise prices of the warrants (if applicable and subject to a floor in certain cases), in the event that we issue common stock or common stock equivalents (as that term is defined in the agreements) at an effective conversion/exercise price that is less than the then exercise/conversion prices of the outstanding preferred stock or convertible debentures, as the case may be. These provisions, as well as the issuances of convertible preferred stock convertible notes payable with conversion prices that vary based upon the price of our common stock on the date of conversion, have resulted in significant dilution of our common stock and have given rise to reverse splits of our common stock.

The following table presents the dilutive effect of our various potential shares of common stock as of December 31, 2025:

December 31, 2025

Shares of common stock outstanding

Dilutive potential shares:

Convertible preferred stock

Convertible notes payable

Vector Warrants

Public and Private Warrants

Common stock options

Total potentially dilutive shares of common stock, including outstanding common stock

If we issue additional shares of our common stock or convertible equity or debt in the future, whether in connection with a financing or in exchange for services or rights, it will result in the dilution of our existing stockholders.

We may choose to issue shares of Class A Common Stock and/or securities exercisable for or convertible into Class A Common Stock to, among other things, reduce our debt, to acquire one or more companies, to fund our operations and in exchange for services rendered to the Company. Such issuances may not require the approval of our stockholders. We have previously issued shares and rights to receive shares in satisfaction of outstanding amounts payable by us to service providers in exchange for services rendered. Any future issuances may reduce the book value per share and may contribute to a reduction in the market price of the outstanding shares of the Class A Common Stock. If we issue any such additional shares or securities in the future, such issuance will reduce the proportionate ownership and voting power of all current stockholders.

FINRA has refused to process our proposed reverse stock split and our appeal of that determination may not be successful.

On September 25, 2025, the Company submitted a Company-Related Notification to FINRA’s Department of Market Operations in connection with a proposed reverse stock split. On March 6, 2026, the Department issued a deficiency notice pursuant to FINRA Rule 6490(d)(3), determining that the Company’s corporate action submission would not be processed.

The Department’s determination was based, in part, on a pending SEC civil action against the managing partner of an institutional investor that holds shares of the Company’s Series A Preferred Stock, as well as the Department’s view that, upon conversion of such preferred stock, the investor could own approximately 95% of the Company’s outstanding common stock, without giving effect to the beneficial ownership limitations contained in the terms of such securities.

The Company disagrees with the Department’s determination and, on March 12, 2026, filed a Notice of Appeal. The appeal will be considered by a subcommittee of FINRA’s Uniform Practice Code Committee, and the subcommittee’s determination will constitute final action within FINRA. The appeal is currently pending, and FINRA has scheduled a review date of April 27, 2026. There can be no assurance that the appeal will be successful.

If the appeal is unsuccessful, the Company may need to pursue alternative approaches to address its capital structure. In addition, the inability to complete the reverse stock split may limit the Company’s ability to access capital, including under its existing $5.0 million equity line of credit, which could materially adversely affect the Company’s liquidity and its ability to execute its business plan.

Under FINRA Rule 6490, FINRA’s Department of Market Operations may refuse to process corporate action requests, including reverse stock splits, if persons connected to the issuer or the corporate action, including shareholders, are the subject of pending regulatory actions or investigations related to fraud or securities law violations. As demonstrated by FINRA’s March 2026 deficiency notice regarding our proposed reverse stock split, the Company may be adversely affected by regulatory proceedings involving third-party holders of our securities, even where the Company itself is not a party to or the subject of such proceedings and has no ability to control the conduct or status of those proceedings. Our capital structure includes multiple series of convertible preferred stock held by institutional and other investors, and we cannot assure you that current or future regulatory actions involving any such holders will not result in similar impediments to our ability to process corporate actions through FINRA, maintain orderly trading of our securities on the OTC Markets, or take other steps necessary to manage our capital structure. Any such impediments could materially and adversely affect our business, financial condition, and the trading price and liquidity of our Class A Common Stock.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

References to “FOXO” the “Company,” “us,” “our” or “we” refer to FOXO Technologies Inc. and its consolidated subsidiaries. The following discussion and analysis summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity, capital resources and cash flows of our Company as of and for the periods presented below. The following discussion should be read in conjunction with our consolidated financial statements and related notes included under “Item 8. Financial Statements” in this Annual Report.

Formation

We were formed as a limited liability company on November 11, 2019, following our separation from GWG Holdings, Inc. We were previously named InsurTech Holdings, LLC and FOXO BioScience LLC. On November 13, 2020, FOXO Bioscience LLC completed a conversion to a C Corporation and became FOXO.

Effective September 15, 2022, we consummated our previously announced business combination pursuant to the Merger Agreement, whereby DWIN Merger Sub Inc. merged with and into Legacy FOXO, with Legacy FOXO surviving as a wholly-owned subsidiary of the Company. Upon consummation of our business combination, our name changed from Delwinds Insurance Acquisition Corp. to FOXO Technologies Inc.

Overview

As of December 31, 2025, FOXO owns and operates four principal subsidiaries.

Myrtle Recovery Centers, Inc., (“ Myrtle ”) a 30-bed behavioral health facility in East Tennessee. Myrtle provides inpatient services for detox and residential treatment and outpatient services for medication assisted treatment (“ MAT ”) and OBOT Programs.

Rennova Community Health, Inc., (“ RCHI ”) owns and operates Scott County Community Hospital, Inc. (“ SCCH ”) (d/b/a Big South Fork Medical Center (“ BSF ”)), a critical access designated (CAH) hospital in East Tennessee.

Vector BioSource Inc. (“ Vector ”) is an information, data and biospecimen sourcing provider serving the biotechnology, clinical research and pharmaceutical research industries.

FOXO Labs, Inc. is a biotechnology company dedicated to improving human health and life span through the development of cutting-edge technology and product solutions for various industries.

Our Business Segments

The Company manages and classifies its business into three reportable business segments: (i) Healthcare, (ii) Life Science Services and (iii) Labs.

Healthcare - The Company’s healthcare segment began with the acquisition of Myrtle on June 14, 2024 and includes RCHI, which was acquired on September 10, 2024. Myrtle offers behavioral health services, primarily substance use disorder treatments and services that are provided on either an inpatient, residential basis or an outpatient basis. RCHI’s hospital, BSF, has 25 inpatient beds, and a 24/7 emergency department and provides ancillary services, including laboratory, radiology, respiratory and pharmacy services. BSF is designated as a Critical Access Hospital (rural) hospital.

Life Science Services – The Company’s Life Science Services segment began with the acquisition of Vector on September 19, 2025. Vector is an information, data and biospecimen sourcing provider serving the biotechnology, clinical research and pharmaceutical research industries.

Labs - The Company’s Labs segment is commercializing proprietary epigenetic biomarker technology. The Company’s innovative biomarker technology enables the adoption of new saliva-based health and wellness biomarker solutions. The Company’s research demonstrates that epigenetic biomarkers, collected from saliva, provide measures of individual health and wellness for the factors used in life insurance underwriting traditionally obtained through blood and urine specimens.

Reverse Stock Splits

On April 17, 2025, the Company’s board of directors (pursuant to a previously-obtained shareholder approval) approved the First Reverse Stock Split. The First Reverse Stock Split was effective at 4:01 p.m., Eastern Time, on April 28, 2025. Trading reopened on April 29, 2025, which is when the Company’s Class A Common Stock began trading on a post reverse stock split basis.

On July 17, 2025, the Company’s board of directors (pursuant to previously obtained shareholder approval) approved the Second Reverse Stock Split and together with the First Reverse Stock Split. The Second Reverse Stock Split was effective at 4:01 p.m., Eastern Time, on July 27, 2025. Trading reopened on July 28, 2025, which is when the Company’s Class A Common Stock began trading on a post reverse stock split basis.

All share amounts herein have been adjusted to reflect the reverse stock split.

On September 2, 2025, RHI, a shareholder representing a majority of the voting control of the Company, approved a proposal to amend our Certificate of Incorporation to effect a reverse stock split of our issued and outstanding Common Stock any time before July 31, 2026, at a ratio ranging from one-for-ten (1:10) to one-for-five hundred (1:500) with the exact ratio within such range to be determined at the sole discretion of the Company’s Board of Directors, without further approval or authorization of our stockholders before the filing of an amendment to the Certificate of Incorporation effecting the proposed reverse split. The Company has filed an Information Statement on Schedule 14C with the SEC with respect to the matters approved by the Majority Stockholder and has mailed the definitive Information Statement on Schedule 14C to its stockholders of record as of the record date.

On September 25, 2025, the Company submitted a Company-Related Notification to FINRA’s Department of Market Operations in connection with a proposed reverse stock split. On March 6, 2026, the Department issued a deficiency notice pursuant to FINRA Rule 6490(d)(3), determining that the Company’s corporate action submission would not be processed.

The Department’s determination was based, in part, on a pending SEC civil action against the managing partner of an institutional investor that holds shares of the Company’s Series A Preferred Stock, as well as the Department’s view that, upon conversion of such preferred stock, the investor could own approximately 95% of the Company’s outstanding common stock, without giving effect to the beneficial ownership limitations contained in the terms of such securities.

The Company disagrees with the Department’s determination and, on March 12, 2026, filed a Notice of Appeal. The appeal will be considered by a subcommittee of FINRA’s Uniform Practice Code Committee, and the subcommittee’s determination will constitute final action within FINRA. The appeal is currently pending, and FINRA has scheduled a review date of April 27, 2026. There can be no assurance that the appeal will be successful.

If the appeal is unsuccessful, the Company may need to pursue alternative approaches to address its capital structure. In addition, the inability to complete the reverse stock split may limit the Company’s ability to access capital, including under its existing $5.0 million equity line of credit, which could materially adversely affect the Company’s liquidity and its ability to execute its business plan.

Acquisitions

Stock Exchange Agreements with RHI

On June 10, 2024, the Company entered into two stock exchange agreements, each with RHI as follows:

Acquisition of Myrtle Under First Stock Exchange Agreement

The first agreement, as supplemented (the “ Myrtle Agreement ”), provided for RHI to exchange all of its equity interest in Myrtle for $0.5 million, payable in a combination of shares of the Company’s Class A Common Stock and a note payable. The closing occurred effective on June 14, 2024. The Company recorded a non-interest bearing note payable due on demand to RHI in the amount of $0.3 million and it paid the remaining purchase price of $0.2 million by issuing 51,439 shares of its Class A Common Stock to RHI on July 17, 2024. In addition to the $0.3 million promissory note issued to RHI for a portion of the purchase price of Myrtle, Myrtle issued a promissory note payable to RHI dated June 13, 2024, in the original principal amount of $1.6 million, which represented the amount owed to RHI by Myrtle at the time of the sale of Myrtle to the Company.

Myrtle was formed in the second quarter of 2022 to pursue opportunities in the behavioral health sector, including substance use disorder treatment, initially in rural markets. Services are provided on either an inpatient, residential basis or an outpatient basis.

Acquisition of RCHI and Its Subsidiary SCCH Under the Second Stock Exchange Agreement with RHI, as Amended and Restated

The second agreement with RHI, also dated June 10, 2024, (the “ RCHI Agreement ”) provided for the RHI to exchange all of the outstanding shares of its subsidiary RCHI, including SCCH, for 20,000 shares of the Company’s to be authorized Series A Preferred Stock. On September 10, 2024, the parties to the RCHI Agreement entered into an Amended and Restated Securities Exchange Agreement (the “ Amendment ”) which revised the consideration payable to RHI from shares of Series A Preferred Stock to $100. In addition, RCHI issued to the RHI a senior secured note in the principal amount of $22.0 million the “ RCHI Note ”) (subject to adjustment). The RCHI Note had a maturity date of September 10, 2026 and accrued interest on any outstanding principal amount at the rate of 8% per annum for the first six months, increasing to 12% per annum thereafter. After maturity, interest accrued at a rate of 20% per annum. The RCHI Note required principal repayments equal to 10% of the free cash flow (net cash from operations less capital expenditures) from RCHI and SCCH.

The RCHI Note was guaranteed by the Company and SCCH, pursuant to the terms of a Guaranty Agreement (the “ Guaranty ”). The RCHI Note was also secured by the assets of RCHI and Scott County pursuant to a Security and Pledge Agreement (the “ RCHI Pledge Agreement ”) and by the “Collateral” owned by the Company as provided in the Security and Pledge Agreement with FOXO (the “ FOXO Pledge Agreement ”). The Amendment also provided that RHI may at any time request that the Company seek approval of its shareholders of the issuance of its Class A Common Stock upon conversion in full of the shares of the Company’s Series A Preferred Stock issuable upon exchange of the RCHI Note. At any time after receipt of such approval, RHI had the option to exchange, in whole or in part, the RCHI Note for shares of the Company’s Series A Preferred Stock. Upon any such exchange, RHI would receive the equivalent of $1.00 stated value of the Company’s Series A Preferred Stock for each $1.00 of the aggregate of principal and accrued and unpaid interest, liquidated damages and/or redemption proceeds (or any other amounts owing under the RCHI Note) being exchanged. On December 5, 2024, the Company and RCHI entered into an Exchange Agreement (the “ Exchange Agreement ”) with RHI. Pursuant to the Exchange Agreement, $21.0 million of the principal balance of the RCHI Note was exchanged for 21,000 shares of the Company’s Series A Preferred Stock with a stated value of $21.0 million. Upon the closing of the Exchange Agreement, RCHI executed a senior secured promissory note payable to RHI (the “New RCHI Note”) in the principal amount of $1.0 million, with similar terms to the RCHI Note. At December 31, 2025, the New RCHI Note is in default and the Company is in discussions with RHI about extending the maturity date of the note.

Pursuant to the RCHI SEA, in the event that the Company, at any time after June 10, 2024, the date specified in the RCHI SEA, and during the twelve months thereafter, entered into any agreement or settlement agreement with any pre-existing holder of debt or other liability owed by the Company above $5.0 million (cumulative) then the consideration payable shall increase on a dollar for dollar basis for the aggregate settlement amount above $5.0 million. As of the September 10, 2024 acquisition date, the full scope of the Company’s obligations to pre-existing debt holders or other creditors was not determinable, as negotiations with creditors and debt holders remained open and unresolved. As of September 10, 2025, which was one year from the date of the RCHI acquisition, the Company had fully settled approximately $6.0 million of cumulative debts and other liabilities above $5.0 million. Accordingly, during the year ended December 31, 2025, the Company issued a $1.0 million note payable to RHI (the “ Additional RCHI Note ”) and the Company issued to RHI 5,000 shares of its Series A Preferred Stock with a stated value of $5.0 million. The additional consideration owed of $6.0 million was recorded as additional goodwill. In addition, the Company has agreed to extend the period for settlement of qualifying debt and other liabilities that are not yet settled or quantified through June 30, 2026. In the fourth quarter of 2025, the Company settled an additional $0.1 million of qualifying debt and other liabilities. Since this settlement was made after the end of the one-year measurement period of September 10, 2025, but prior to the end of the extension period of June 30, 2026, the Company recorded the additional amount as an expense in the consolidated statement of operations and a related party loan to RHI in the consolidated balance sheet at December 31, 2025. The Company cannot estimate the settlement amount of additional liabilities that existed at June 10, 2024 and that may be settled through the extension period of June 20, 2026 because of ongoing negotiations that remain unresolved. Any additional amount will be recorded as an additional expense in the consolidated statement of operations and as an additional liability to RHI.

BSF is a critical access hospital located in Oneida, Tennessee consisting of a 52,000-square foot hospital building and 6,300-square foot professional building on approximately 4.3 acres. BSF has 25 inpatient beds and a 24/7 emergency department and provides ancillary services, including laboratory, radiology, respiratory and pharmacy services. The hospital became operational on August 8, 2017 and it became designated as a critical access hospital (rural) in December 2021, retroactive to June 30, 2021.

Acquisition of Vector Under Stock Purchase Agreement

On September 9, 2025, the Company entered into the Stock Purchase Agreement with Vector, (the “ Vector SPA ”), between the stockholders (each, a “ Seller ,” or, together, the “ Sellers ”) owning all of the issued and outstanding equity securities of Vector (the “ Purchased Shares ”) and FOXO Acquisition Corporation, a Florida corporation and wholly-owned subsidiary of the Company (“ FAC ”), (the “ Vector Acquisition ”). Pursuant to the SPA, upon closing on September 19, 2025, the Sellers exchanged the Purchased Shares for (i) $500,000 in cash, (ii) 60,000 shares of the Company’s Series E Cumulative Redeemable Secured Preferred Stock (the “ Series E Preferred Stock ”) with a stated value of $25.00 per share, or a total stated value of $1,500,000, (iii) 386,847,195 three year warrants to purchase shares of the Company’s Class A Common Stock with an exercise price of $0.00517 per share (the “ Vector Warrants ”), which was equal to the closing price of the Company’s Class A Common Stock on the trading day immediately prior to closing, plus 10%, (subject to adjustment) valued at $769,826 and (iv) up to 80,000 shares of Series E Preferred Stock to be issued to the Sellers on or before 120 days after the two-year anniversary of the closing; provided that, such shares will only be issued in the event that the Qualifying Revenue (as defined in the Vector SPA) of the Business (as defined in the Vector SPA) during the 12-month period between the first and second anniversary of the closing are at least $4,000,000; provided, further, that in the event that less than $4,000,000 of Qualifying Revenues are actually collected by Vector on or before 90 days after the second anniversary of the closing, the number of shares of Series E Preferred Stock to be issued to the Sellers will be reduced by an amount equal to one share for each $25.00 of Qualifying Revenues less than $4,000,000 collected by such date; and, provided, further, if a Change of Control (as defined in the Vector SPA) of the Company occurs prior to the two-year anniversary of the closing, all of the up to 80,000 shares of Series E Preferred Stock will be issued to the Sellers as of the date of such Change of Control. Pursuant to the Vector SPA, the Sellers have the right, but not obligation, to repurchase the Purchased Shares under certain limited circumstances at fair market value as determined by a third party and subject to a floor. As of December 31, 2025, the Company has recorded $500,000 of additional contingent purchase price consideration, which amount was based on the estimated value of additional shares of Series E Preferred Stock that will be owed pursuant to current projections of Qualifying Revenue.

Vector is an information, data and biospecimen sourcing provider serving the biotechnology, clinical research and pharmaceutical research industries.

Amended Service Agreement and Termination of Employment, Settlement and Mutual Release Agreement

On July 25, 2024, we entered into an amended Services Agreement with Mark White, our former interim chief executive officer, (the “ Services Agreement ”).

On December 5, 2024, we entered into a Termination of Employment, Settlement and Mutual Release Agreement (the “White Termination Agreement”) pursuant to which the Services Agreement is to be terminated.

KR8 Termination Agreement

On December 6, 2024, we entered into the Termination Agreement with KR8, pursuant to which 3,000 shares (the “ KR8 Shares ”) of our Series D Cumulative Convertible Redeemable Preferred Stock (“ Series D Preferred Stock ”) were issued to KR8 as full and final satisfaction of approximately $3.0 million owed to KR8 and the Master Software and Services Agreement with KR8 dated January 12, 2024, as amended (the “ MSSA ”), was terminated (the “ KR8 Termination Agreement ”). The Series D Preferred Stock have no voting rights and conversion to common stock by KR8 is subject to relevant approvals from NYSE and shareholders. The Termination Agreement closed on December 6, 2024. Effective December 6, 2024, the Company and KR8 entered into Amendment No. 1 to the KR8 Termination Agreement, which clarifies that the KR8 Termination Agreement did not terminate the MSSA but terminated the financial obligations of the Company under the MSSA.

Current Business Strategy

Myrtle Recovery Centers, Inc.

Myrtle was formed in the second quarter of 2022 to pursue opportunities in the behavioral health sector, including substance abuse treatment, initially in rural markets. Services are provided on either an inpatient, residential basis or an outpatient basis.

Myrtle was granted a license by the Department of Mental Health and Substance Abuse Services of Tennessee to operate an alcohol and drug treatment facility in Oneida, Tennessee. The facility, which is located at BSF’s campus, commenced operations and began accepting patients on August 14, 2023. The facility offers alcohol and drug residential detoxification and residential rehabilitation treatment services for up to 30 patients. On November 1, 2023, Myrtle began accepting patients at its OBOT. The OBOT is located adjacent to Myrtle’s alcohol and drug treatment facility in Oneida, Tennessee and complements the existing residential rehabilitation and detoxification services offered at Myrtle. On April 11, 2023, Myrtle sold shares of its common stock equivalent to a 1.961% ownership stake in the subsidiary for de minimis value to an unaffiliated individual licensed as a physician in Tennessee. The shares have certain transfer restrictions, including the right of the subsidiary to transfer the shares to another physician licensed in Tennessee for de minimis value. The shares were sold to the individual for Tennessee healthcare regulatory reasons

We plan to expand the Myrtle business model by acquiring additional operating facilities and by replicating the model in other rural hospital properties or suitable premises.

Rennova Community Health, Inc.

RCHI’s wholly-owned subsidiary, SCCH, is an east Tennessee based Critical Access Designated (CAH) 25-bed hospital licensed by the state of Tennessee, offering quality healthcare services for Oneida and the surrounding areas. SCCH is doing business as BSF. BSF consists of a 52,000-square foot hospital building and 6,300-square foot professional building on approximately 4.3 acres. BSF has 25 inpatient beds, and 24/7 emergency department and provides ancillary services, including laboratory, radiology, respiratory and pharmacy services. The hospital became operational on August 8, 2017 and it became designated as a Critical Access Hospital (rural) hospital in December 2021, retroactive to June 30, 2021. The hospital first opened in late 1955 and was known as Scott County Community Hospital. The hospital has been operated by RCHI since August 2017.

We plan to grow this division by expansion of services at its BSF campus and acquisitions in targeted areas.

Vector BioSource Inc.

Vector is an information, data and biospecimen sourcing provider serving the biotechnology, clinical research and pharmaceuticals research industries. Vector plans to transform the biospecimen sourcing landscape with an innovative AI-driven platform that it believes will provide researchers’ immediate access to bio-samples, including, whole blood samples, bulk serum collections and toxicology urine specimens. The Company is actively pursuing an acquisition in the sector that, if successful, will deliver an FDA-approved collection and processing capability in the US from which Vector can aggressively grow its business. Vector is also actively seeking international sourcing partners that can provide certain (rare) disease state samples for the research and development sector only. Vector has initiated its first agreement with a partner in India and has been successful in sourcing samples from there as well as from Latin America to satisfy certain orders received.

We plan to grow this division by organic expansion of the current business and acquisition of similar or complementary businesses.

FOXO Labs

Our epigenetics subsidiary has been serving as a pioneer in the development and integration of epigenetic biomarkers into state-of-the-art underwriting protocols and consumer engagement tools. We are using next-generation technology to transform human health and longevity.

Epigenetic technology has been proven to provide health, lifestyle, and longevity insights that have never before been accessible to humans—from just a single saliva sample. Using saliva-based epigenetic biomarkers, we are eliminating the need for invasive collection, allowing us to provide scientists with advanced epigenetic testing services and bioinformatic tools that support groundbreaking research.

We believe there is growing demand for direct-to-consumer wellness testing and epigenetic data analysis tools and are concentrating efforts on: (1) our Bioinformatics Services offering, a suite of bioinformatic tools to help researchers process, analyze, and interpret epigenetic data; and (2) research and development in the fields of health and wellness testing powered by machine learning and artificial intelligence (including a potential AI platform for the delivery of health and well-being data-driven insights to individuals, healthcare professionals and third-party service providers). To further these goals, we intend to leverage the extensive epigenetic data we have generated in our clinical trials and the expertise of our team and continue building strategic alliances with new partners in academia, business, healthcare and government. We also intend to frequently evaluate and develop commercialization opportunities for our product and service offerings and our research findings.

The Board of Directors continues to consider its options for this division of our business. While there is significant opportunity to monetize and grow the epigenetics business the Company cannot pursue these opportunities until it secures required capital. Intangible assets in this division have been impaired to zero as there currently is no timeline for getting a revenue generating product to market. We believe significant value could be achieved by launching an interpretation product in partnership with nutrients providers for people to manage their diet and wellbeing but will also consider joint ventures or the sale of this business if viable.

Net Revenues

Healthcare generates revenues from hospital and ancillary services as well as substance abuse treatments, including inpatient and outpatient services. Life Science Services generates revenues from sales of biological materials, such as blood and urine to the pharmaceutical and biotechnology research sectors. Labs currently recognizes revenues from collecting a royalty from Illumina, Inc. related to the sales of the Infinium Mouse Methylation Array.

Results of Operations

Years Ended December 31, 2025 and 2024

December 31,

Change in

Change in

Net revenues

Operating expenses:

Direct costs of revenues

Research and development

Management contingent share plan expense (forfeitures), net

Impairments of intangible assets

Goodwill impairment

Selling, general and administrative expenses

Total operating expenses

Loss from operations

Change in fair value of warrant liabilities

Interest expense

Gain (loss) from extinguishments of debt

Other non-operating expenses, net

Loss before benefit for income taxes

Income tax benefit

Net loss, including noncontrolling interest

Noncontrolling interest

Net loss attributable to FOXO

Deemed dividends

Net loss to common stockholders

NM = Not Meaningful

Net revenues. Net revenues were $16.4 million for the year ended December 31, 2025, compared to $4.1 million for the year ended December 31, 2024 an increase of $12.3 million. Myrtle, acquired on June 14, 2024, contributed $1.6 million of the increase, RCHI, acquired on September 10, 2024, contributed $10.4 million of the increase and Vector, acquired on September 19, 2025, contributed $0.3 million of the increase. Labs net revenues were $13,923 and $32,640 for the years ended December 31, 2025 and 2024, respectively. Included in RCHI net revenues for the year ended December 31, 2025, were net revenues of $3.5 million from the State of Tennessee’s Hospital Improvement Plan (the “THIP”). The THIP is designed to increase revenues for hospitals serving TennCare patients.

Direct Costs of Revenues. Direct costs of revenues were $8.3 million for the year ended December 31, 2025, compared to $2.5 million of direct costs of revenues for the year ended December 31, 2024. Myrtle’s direct costs of revenues were $1.2 million, RCHI’s were $7.0 million and Vector’s were $0.1 million for the year ended December 31, 2025. Myrtle was acquired on June 14, 2024, RCHI was acquired on September 10, 2024 and Vector was acquired on September 19, 2025. Myrtle’s and RCHI’s direct costs for the year ended December 31, 2024 were $0.4 million and $2.1 million respectively.

Research and Development. Research and development expenses were $0.2 million or the year ended December 31, 2025, compared to $0.3 million for the year ended December 31, 2024. The decrease was due to research and development projects that were paused or that are no longer ongoing.

Management Contingent Share Plan. During the years ended December 31, 2025 and 2024, forfeitures of 168 and 620 unvested shares, respectively, that were previously granted under the Management Contingent Share Plan resulted in a net decrease of compensation expense under the plan of ($0.2) million and ($0.1) million, respectively.

Impairments of Intangible Assets. During the years ended December 31, 2025 and 2024, total impairment losses were $0 million and $1.8 million, respectively. The impairment loss recorded for 2024 consisted of $1.7 million for the Epigenetic APP and $0.2 for the methylation pipeline asset. In December 2024, the Company determined that the projected cash flows could no longer support the Epigenetic APP and the methylation pipeline asset.

Goodwill Impairment. During the year ended December 31, 2025, the Company recorded $7.0 million of goodwill impairment. No goodwill impairment was recorded in 2024. We determined that the goodwill recorded for SCCH was impaired as of December 31, 2025, based on our annual goodwill impairment testing in which we estimated fair value of the business using a discounted cash flow analysis of future projected cash flows.

Selling, General and Administrative. Selling, general and administrative expenses were $11.4 million for the year ended December 31, 2025, compared to $7.2 million for the year ended December 31, 2024. The increase of $4.2 million, or 48.49%, was driven by expenses associated with Myrtle acquired on June 14, 2024, RCHI acquired on September 10, 2024 and Vector acquired on September 19, 2025. In addition, Corporate’s selling, general and administrative expenses increased by $0.5 million in 2025 compared to 2024, which we attribute primarily to legal and insurance expenses, digital and website advertising, professional fees, rent and franchise taxes, offset by a decrease in payroll related expenses, among other items.

Change in Fair Value of Warrant Liability. The fair value of the warrant liability decreased by $41,246 and increased by $32,425 for the years ended December 31, 2025 and 2024, respectively. The changes in the fair values were due primarily to the changes in the quoted prices of the Public Warrants on the OTC Pink Marketplace.

Gain (Loss) from Extinguishment of Debt. During the year ended December 31, 2025, we exchanged $5.4 million of Senior PIK Notes, which included $1.9 million of accrued interest, for $3.5 million of stated value of our Series B Cumulative Convertible Redeemable Preferred Stock (“ Series B Preferred Stock ”) resulting in a gain of $1.9 million. The loss from extinguishment of debt for the year ended December 31, 2024 of $0.4 million, resulted from the exchange of $2.2 million of notes payable and $1.1 million of accounts payable for $3.7 million of stated value of our preferred stock.

Interest Expense. Interest expense was $3.4 million for the year ended December 31, 2025 compared to $3.9 million for the year ended December 31, 2024. The decrease was primarily attributable to a reduction of interest expense on the Senior PIK Notes that were exchanged for the Company’s Series B Preferred Stock in January 2025 and interest for the right-of-use operating lease obligation that is included in selling, general and administrative expenses in 2025. Partially offsetting these items, was additional interest expense on promissory notes.

Other Non-Operating Expenses, Net. Other non-operating expenses, net were $0.9 million for the year ended December 31, 2025, compared to other non-operating expenses, net of $0.3 million for the year ended December 31, 2024. The non-operating expenses, net in 2025 resulted primarily from $0.8 million of penalties and interest for nonpayment of payroll taxes, an $0.1 million of additional purchase price consideration for RCHI, partially offset by hospital cafeteria income of $0.2 million, among other items. The non-operating expenses, net in 2024 were attributable to $0.3 million of penalties and interest for nonpayment of payroll taxes, a $0.1 million loss on legal settlement, partially offset by cafeteria income of $0.1 million.

Income Tax Benefit. The $0.2 million income tax benefit in the year ended December 31, 2025, resulted from the release of $0.2 million of deferred tax valuation allowance due to the acquisition of Vector. We did not incur a benefit for income taxes in 2024.

Net Loss Attributable to FOXO. Net loss attributable to FOXO was $12.4 million for the year ended December 31, 2025 compared to a net loss attributable to FOXO of $12.4 million for the year ended December 31, 2024. The loss from operations was $10.3 million and $7.8 million for the years ended December 31, 2025 and 2024, respectively, or an increase of $2.5 million due primarily to the $7.0 million goodwill impairment in 2025 compared to an intangible asset impairment of $1.8 million in 2024. Excluding these asset impairments, the loss from operations decreased by $2.7 million for the year ended December 31, 2025 compared to 2024, which we attribute primarily to the $3.5 million of THIP net revenues recorded in the year ended December 31, 2025. Partially offsetting the net loss attributable to FOXO in the year ended December 31, 2025 was the $1.9 million gain from extinguishment of Senior PIK Notes in the 2025 period, compared to a loss from extinguishments of debt of $0.4 million in the 2024 period, a decrease of interest expense of $0.5 million and the gain from the change in fair value of warrants of $41,246 in 2025 period, partially offset by an increase in other non-operating expenses, net of $0.5 million in the year ended December 31, 2025 compared to 2024. We recorded deemed dividends in the year ended December 31, 2025 of $21.7 million resulting primarily from decreases in the floor conversion prices of our convertible preferred stock from floors ranging from $0.01 to $0.995 per share to $0.0001 per share. Deemed dividends in the year ended December 31, 2025 also resulted from the issuances of preferred stock, the conversion of and anti-dilution provisions of our Series C Cumulative Convertible Redeemable Preferred Stock (“ Series C Preferred Stock ”) and the triggers of the down-round provisions of the Assumed Warrants compared to deemed dividends of $1.1 million related to the triggers of the down-round provisions and extension of the Assumed Warrants during year ended December 31, 2024. The deemed dividends resulted in a net loss to common stockholders of $34.1 million and $13.5 million for the years ended December 31, 2025 and 2024, respectively.

Analysis of Segment Results:

The following is an analysis of our results by reportable segment for the year ended December 31, 2025 compared to the year ended December 31, 2024. The primary earnings/loss measure used for assessing reportable segment performance is segment income/loss defined as earnings/loss before interest, income taxes, and depreciation and amortization not associated with a specific segment. Segment income/loss by reportable segment also excludes corporate and other costs, including management, IT, and overhead costs. For further information regarding our reportable business segments, please refer to our consolidated financial statements and related notes included elsewhere in this Annual Report.

Healthcare

Year ended

December 31, 2025

Year Ended

December 31, 2024

Change in

Change in

Total revenues

Operating expenses (1)

Noncontrolling interest

Segment Loss

Includes $7.0 million of goodwill impairment for the year ended December 31, 2025.

Net Revenues. Net revenues were $16.1 million for the year ended December 31, 2025 and include Myrtle’s net revenues of $2.2 million and RCHI’s net revenues of $13.9 million. Net revenues for the year ended December 31, 2024 of $4.0 million represent $0.6 million net revenues of Myrtle and $3.4 million net revenues of RCHI. Myrtle was acquired on June 14, 2024 and RCHI was acquired on September 10, 2024. Our healthcare segment began with the acquisition of Myrtle. The net revenues of RCHI for the year ended December 31 2025 included $3.5 million of net revenues from the THIP.

Segment Loss. Segment loss was $8.9 million for the year ended December 31, 2025 compared to segment loss of $1.7 million for the year ended December 31, 2024, an increase of $7.2 million. We attributable the increase in the loss primarily to the $7.0 million of goodwill impairment recorded for the year ended December 31 2025.

Life Science Services

Year Ended

December 31, 2025

Year Ended

December 31, 2024

Change in

Change in

Net revenues

Operating expenses

Segment Loss

NM = Not meaningful

Net Revenues. Net revenues were $0.3 million for the year ended December 31, 2025 and represent net revenues from Vector, which was acquired on September 19, 2025.

Segment Loss. Segment loss was $0.1 million for the year ended December 31, 2025 and represents the loss from Vector.

Labs

Year Ended

December 31, 2025

Year Ended

December 31, 2024

Change in

Change in

Total revenues

Operating expenses

Segment Loss

Net revenues. Net revenues were $13,923 and $32,640 for the years ended December 31, 2025 and 2024, respectively. Net revenues consist primarily of royalty income.

Segment Loss. Segment loss decreased to $0.2 million for the year ended December 31, 2025 compared to a loss of $1.1 million for the year ended December 31, 2024. The decrease was driven by research and development projects that are paused or that are no longer ongoing. During the year ended December 31, 2024, the Company incurred approximately $0.8 million of maintenance fees and minimum royalties associated with its Epigenetic APP.

Other Operating Data:

We use Adjusted EBITDA to evaluate our operating performance. Adjusted EBITDA does not represent and should not be considered an alternative to net income as determined by U.S. GAAP, and our calculations thereof may not be comparable to those reported by other companies. We believe Adjusted EBITDA is an important measure of operating performance and provides useful information to investors because it highlights trends in our business that may not otherwise be apparent when relying solely on U.S. GAAP measures and because it eliminates items that have less bearing on our operating performance. Adjusted EBITDA, as presented herein, is a supplemental measure of our performance that is not required by, or presented in accordance with, U.S. GAAP. We use non-GAAP financial measures as supplements to our U.S. GAAP results in order to provide a more complete understanding of the factors and trends affecting our business. Adjusted EBITDA is a measure of operating performance that is not defined by U.S. GAAP and should not be considered a substitute for net (loss) income as determined in accordance with U.S. GAAP.

We reconcile our non-GAAP financial measure to our net loss, which is its most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. Our management uses Adjusted EBITDA as a financial measure to evaluate the profitability and efficiency of our business model. Adjusted EBITDA is not presented in accordance with U.S. GAAP. Adjusted EBITDA includes adjustments for provision for income taxes, as applicable, interest income and expense, depreciation and amortization, equity-based compensation, and certain other infrequent and/or unpredictable non-cash charges or benefits, such as impairments, changes in fair value of warrant liabilities, adjustments for right-of-use operating lease expense and adjustments to include pro forma operating performance of acquisitions as if they had occurred at the beginning of the earliest period presented.

For the year ended

December 31,

Net loss attributable to FOXO

Add: Depreciation and amortization

Add: Interest expense, excluding interest for right-of-use obligations

Add: Income tax benefit

Add: Equity-based compensation, net of forfeitures

Add: (Gain) loss from extinguishment of debt

Add: Change in fair value of warrant liability

Add: Impairment charges

Add: Interest expense for right-of-use obligations

Add: Write off investment

Add: RCHI purchase price adjustment

Subtotal

Add: Right-of-use operating lease expense (proforma for 2024)

Add: Pro Forma 2025 and 2024 adjusted EBITDA for RCHI, Myrtle and Vector

Adjusted EBITDA

Liquidity and Capital Resources

Sources of Liquidity and Capital

We had cash and cash equivalents of $207,453 and $68,268 as of December 31, 2025 and 2024, respectively. We have incurred net losses since our inception. For the years ended December 31, 2025 and 2024, we incurred net losses attributable to FOXO of $12.4 million and $12.4 million, respectively. As of December 31, 2025, we had a working capital deficit of $25.5 million. Cash used in operations was $3.9 million and $2.8 million in the years ended December 31, 2025 and 2024, respectively. We expect to incur additional losses in future periods. Our current revenue and operating cash flow is not adequate to fund our operations for the next twelve months and requires us to fund our business through other sources until the time we achieve adequate scale. Securing additional capital is necessary to execute our business strategy.

Private Placements

Strata Purchase Agreement, As Amended

During the fourth quarter of 2023, we entered into the Strata Purchase Agreement with ClearThink, as supplemented by that certain Supplement to Strata Purchase Agreement, dated as of October 13, 2023, by and between us and ClearThink. On August 13, 2024, we entered into Amendment No. 1 to the Strata Purchase Agreement pursuant to which the commitment amount was increased from $2.0 million to $5.0 million. On May 15, 2025, we amended and restated the Strata Purchase Agreement to extend the maturity date to June 30, 2026 and improve and simplify the Purchase Price to define the price per share of Common Stock purchased shall equal 90% of the average of the two (2) lowest daily VWAP during the Valuation Period. To utilize this Agreement and access funding from the equity line of credit described, the Company was required to obtain an effective registration statement, which was obtained on February 11, 2026. Despite having an effective registration statement, we have not been able to access the operating capital available under the Strata Purchase Agreement because current market conditions, including the low trading price and limited trading volume of our Class A Common Stock, have prevented us from satisfying the contractual conditions required for puts under the agreement.

Third Party Promissory Notes Payable

During the year ended December 31, 2024, we issued to third parties 17 promissory notes with principal balances totaling $5.0 million and one-time interest expense totaling $0.1 million and we received net cash proceeds from the issuances totaling $4.1 million. During the year ended December 31, 2024, we exchanged $2.2 million of the promissory notes issued in 2024 for 2,464 shares of our Series A Preferred Stock with a stated value of $1,000 per share. In addition, during the year ended December 31, 2024, $0.6 million of the principal balances of three of the promissory notes issued during 2024 and $61,745 of associated accrued interest were converted into 104,564 shares of our Class A Common Stock pursuant to the conversion terms of such notes.

During the year ended December 31, 2025, we entered into 13 third party promissory notes with principal balances totaling $3.1 million and one-time interest expense totaling $0.2 million and we received net cash of $1.7 million. In addition, in February 2025, the Western Note Payable (the “ Western Note ”), which we assumed when we acquired SCCH, was sold to a new third party holder, Western Healthcare LLC, and it was amended and restated. Per the terms of the amendment and restatement, the principal balance of the note, which included previously accrued interest expense, totaled $1.1 million, the maturity date was February 26, 2026 and the note was convertible into shares of the Company’s Class A Common Stock at a conversion price equal to 90% of the average VWAP for the five trading days prior to conversion. During the year ended December 31, 2025, the third party paid Western approximately 50% of the debt owed, and we issued 0.3 million shares of our Class A Common Stock upon conversions of $0.5 million principal balance of the Western Note. The Western Note is currently in default as the third party failed to make further payments to Western Healthcare LLC and it is probable that no further conversions of the principal balance into shares of our Class A common stock will take place. In addition to the conversion of the Western Note discussed above, during the year ended December 31, 2025, $2.4 million of principal balance of the third-party notes issued in 2025 and 2024, and including accrued interest, were converted and/or exchanged into 535.6 million shares of our Class A Common Stock.

Also in January 2025, we exchanged all outstanding Senior PIK Notes (including all accrued and unpaid interest) (which total value was $5.4 million on the date of the exchange) into 3.457.5 shares of our Series B Preferred Stock with a total stated value of $3.5 million. As a result of the exchange, during the year ended December 31, 2025, the Company recorded a gain from extinguishment of the Senior PIK Notes of $1.9 million,

At December 31, 2025, $1.5 million of the outstanding principal balance and associated one-time accrued interest of third-party promissory notes (excluding the Western Note, which was purchased by a third party that failed to make further payments to Western Healthcare LLC and it is probable that no further conversions of the principal balance into shares of our Class A common stock will take place) were convertible into 15.4 billion shares of our Class A Common Stock per the conversion terms of the notes. Two other promissory notes outstanding at December 31, 2025, were convertible but only in the event of an event of default as that term is defined in the applicable agreements.

As of December 31, 2025, the total principal balance of third-party promissory notes payable was $2.2 million, which was net of $0.1 million of debt discounts. In addition, $0.2 million of accrued interest was owed on these notes. Each of these notes is more fully discussed in the footnotes to the consolidated financial statements presented elsewhere in this Annual Report.

Related Party Promissory Notes and Loans Payable

On September 10, 2024, we issued a note payable that had a maturity date of September 10, 2026 to RHI in the principal amount of $22.0 million for the purchase of RCHI. During December, 2024, we exchanged $21.0 million of the promissory note owed to RHI for 21,000 shares of our Series A Preferred Stock with a stated value of $1,000 per share and we issued to RHI a new promissory note in the principal amount of $1.0 million due on June 5, 2025. At December 31, 2025, the note is in default and the Company is in discussions with RHI about extending the maturity date of the note which extension we expect to receive. During the year ended December 31, 2025, we issued an additional note payable to RHI in the principal amount of $6.0 million for additional purchase price consideration for the purchase of RCHI, of which $5.0 million was exchanged for 5,000 shares of our Series A Preferred Stock with a stated value of $1,000 per share on August 18, 2025 leaving an additional note due to RHI at December 31, 2025 of $1.0 million. During the fourth quarter of 2025, we issued a $0.1 million loan to RHI for an additional purchase price consideration for the purchase of RCHI.

In addition, to the two notes discussed in the paragraph above, we have outstanding at December 31, 2025: (i) a note payable to RHI in the amount of $264,565 for the purchase of Myrtle; (ii) a note payable to RHI in the original amount of $1.6 million, which was the amount owed by Myrtle to RHI on the date that we acquired Myrtle, which balance was $1.4 million as of December 31, 2025; (iii) a note payable to RHI in the amount of $0.3 million for working capital purposes; and (iv) we have outstanding at December 31, 2025, three additional promissory notes payable to related parties totaling $0.8 million. The total amount of notes and loans payable owed to RHI and its subsidiaries from the Company and its subsidiaries at December 31, 2025 was $4.1 million.

Other Loans

At December 31, 2025, the Company had outstanding $237,810 of other loans consisting of loan assumed in the acquisition of Vector with a balance of $36,053 and a loan that was issued under an accounts receivable sales agreement with of a balance of $201,757. Payments under the accounts receivable sale agreement loan of $35,000 per week were due and all of the weekly payments have not been made as required and the loan is in payment default.

Preferred Stock

In addition to the issuances of shares of Series A Preferred Stock for the exchange of third party and RHI notes payable as discussed above, during the year ended December 31, 2024, we issued 120 shares of our Series C Preferred Stock with a stated value of $1,000 per share for net cash proceeds of $0.1 million and we issued 4,311.7 shares of our Series D Preferred Stock with a stated value of $1,000 per share for $4.2 million of accounts payable and accrued expenses. During December 2024, 924 shares of our Series A Preferred Stock were converted into 179,563 shares of our Class A Common Stock.

During the year ended December 31, 2025, we issued 3,400 shares of our Series A Preferred Stock to institutional investors for net cash proceeds of $2.950 million, and, as discussed above, on August 18, 2025, we issued to RHI 5,000 shares of our Series A Preferred Stock with a stated value of $1,000 per share in exchange for $5.0 million principal balance of a note payable. During the year ended December 31, 2025, we issued 1.9 billion shares of our Class A Common Stock upon conversions of 11,599 shares of the Series A Preferred Stock with stated values totaling $11.6 million.

During the year ended December 31, 2025, we issued 3,457.5 shares of our Series B Preferred Stock with a stated value of $1,000 per share in exchange of $5.4 million value of Senior PIK Notes.

During the year ended September 30, 2025, three investors purchased 135 shares of our Series C Preferred Stock for net cash proceeds of $0.1 million and in doing so exchanged 212.5 shares of Series B Preferred Stock for 318.75 shares of Series C Preferred Stock. During the year ended December 31, 2025, we issued 2.5 million shares of our Class A Common Stock upon conversions of 270 shares of our Series C Preferred Stock with stated values totaling $0.3 million.

During the year ended December 31, 2025, we issued 60,000 shares of our Series E Preferred Stock for the acquisition of Vector and we issued 8,000 shares of our Series E Preferred Stock to RHI for payment of $0.2 million of notes payable. Our Series E Preferred Stock has a stated value of $25 per share.

Going Concern

Our primary uses of cash are to fund our operations as we continue to grow our business, as well as to service our debt. We closed the acquisition of Myrtle on June 14, 2024, the acquisition of RCHI on September 10, 2024 and the acquisition of Vector on September 19, 2025. Capital expenditures have historically not been material to our consolidated operations, and we do not anticipate making material capital expenditures over the next 12 months unless we secure additional capital to expand the current operations. We expect that our liquidity requirements will continue to consist of working capital, including payments of outstanding debt and accrued liabilities and general corporate expenses associated with the growth of our business. Based on the size of our current operations, we do not have sufficient capital to fund our corporate overhead for at least 12 months from the date hereof. We expect to address our liquidity needs through the pursuit of additional funding through a combination of equity or debt financing and additional strategic acquisitions that we expect will contribute to positive cash flow to enable us to fund our operations. Completing such acquisitions requires significant additional capital that has not yet been secured.

We have taken various actions to bolster our cash position, including raising funds through the private placements and the issuances of promissory notes and other loans, and conserving cash by issuing shares of our preferred stock and shares of our Class A Common Stock under exchange agreements, license agreements, legal settlements, consulting agreements, finder’s fees related to equity and debt financing and consulting agreements, among other transactions, as an alternative to paying in cash.

Based on our current operating plan, our cash position as of December 31, 2025, and after taking into account the actions described above, we do not expect to be able to fund our operations through the twelve months ended December 31, 2026 without the need for additional financing or other increases in our cash and cash equivalents balances to enable us to fund our future operations.

We have based our estimates as to how long we expect we will be able to fund our operations on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect, in which case we would be required to obtain additional financing sooner than currently projected, which funding may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We may raise additional capital through equity offerings, debt financings or other capital sources. If we do raise additional capital through public or private equity offerings, or convertible debt offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely impact our existing stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take certain actions.

The accompanying consolidated financial statements to this Annual Report do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The following table presents our capital resources as of December 31, 2025 and 2024:

December 31,

December 31,

Change

Increase

(Decrease)

Cash

Working capital (deficit)

Total debt, net of discounts of $119,122 and $678,925, respectively

Total stockholders’ equity

The following table summarizes our cash flow data for the years ended December 31, 2025 and 2024:

Cash Provided by/

(Used in)

Years Ended December 31,

Operating Activities

Investing Activities

Financing Activities

Operating Activities

The net cash used in operations in the year ended December 31, 2025 was $3.9 million, or $1.1 million more than the cash of $2.8 million used in operations during the year ended December 31, 2024. The increase was primarily due to the less cash provided by accounts receivable and accrued expenses and other liabilities, including related parties’ payables in the year ended December 31, 2025 compared to 2024.

Investing Activities

Cash flows used $0.7 million and provided $13,329 from investing activities in the years ended December 31, 2025 and 2024, respectively. The cash used in investing activities for the year ended December 31, 2025 resulted from the purchase of Vector, net of cash acquired, of $0.5 million, $0.1 million for the purchase of an intangible assets and $62,021 for the purchases of property and equipment. For the year ended December 31, 2024, the cash provided resulted from the cash acquired from Myrtle and RCHI.

Financing Activities

Net cash provided by financing activities for year ended December 31, 2025 was $4.7 million compared to $2.9 million for the year ended December 31, 2024. Net cash provided by financing activities for the year ended December 31, 2025, included $3.1 million from the issuances of preferred stock, $1.7 million from the issuances of third party notes payable, $3.8 million from related party notes payable, and $0.3 million from other loans, partially offset by $2.1 million of payments of related party notes payable, $0.5 million of payments on other loans and $1.7 million of payments of third party notes payable. Net cash provided by financing activities for the year ended December 31, 2024, included $4.1 million from the issuances of third-party notes payable and $0.1 million from the issuance of preferred stock, partially offset by $1.0 million paid on related party notes payable, $0.3 million of payments on other loans, among other items.

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.

Critical Accounting Policies

The preparation of the consolidated financial statements and related notes included under “ Item 8. Financial Statements ” and related disclosures in conformity with U.S. GAAP. The preparation of these consolidated financial statements requires the selection of the appropriate accounting principles to be applied and the judgments and assumptions on which to base accounting estimates, which affect the reported amounts of assets and liabilities as of the date of the balance sheets, the reported amounts of revenue and expenses during the reporting periods, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances at the time such estimates are made. Actual results and outcomes may differ materially from our estimates, judgments, and assumptions. We periodically review our estimates in light of changes in circumstances, facts, and experience. The effects of material revisions in estimates are reflected in the consolidated financial statements prospectively from the date of the change in estimate.

We define our critical accounting policies and estimates as those that require us to make subjective judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations as well as the specific manner in which we apply those principles. We believe the critical accounting policies used in the preparation of our financial statements which require significant estimates and judgments are as follows:

Revenue Recognition Policy

The Company recognizes revenue in accordance with ASC, “ Revenue from Contracts with Customers (Topic 606),” including subsequently issued updates. Under the accounting guidance, revenues are presented net of estimated contractual allowances and estimated implicit price concessions.

Healthcare

Presently, its healthcare segment consists of the operations of Myrtle from its acquisition date of June 14, 2024, and of RCHI from its acquisition date of September 10, 2024.

Myrtle’s revenues relate to contracts with patients in which its performance obligations are to provide behavioral health care services to its patients. Revenues are recorded during the period its obligations to provide health care services are satisfied. Myrtle’s performance obligations for inpatient services are generally satisfied over periods averaging approximately 7 to 28 days depending on the service line, and revenues are recognized based on charges incurred. The contractual relationships with patients, in most cases, also involve third-party payers and the transaction prices for the services provided are dependent upon the terms provided by or negotiated with the third-party payers. The payment arrangements with third-party payers for the services Myrtle provides to its patients typically specify payments at amounts less than its standard charges. Services provided to patients are generally paid at prospectively determined rates per diem.

RCHI’s revenues relate to contracts with patients of BSF in which its performance obligations are to provide health care services to the patients. Revenues are recorded during the period its obligations to provide health care services are satisfied. Its performance obligations for inpatient services are generally satisfied over periods averaging approximately three days, and revenues are recognized based on charges incurred. Its performance obligations for outpatient services, including emergency room-related services, are generally satisfied over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers. The payment arrangements with third-party payers for the services it provides to the related patients typically specify payments at amounts less than our standard charges. Medicare, because of BSF’s designation as a critical access care hospital, generally pays for inpatient and outpatient services at rates related to the hospital’s costs. Services provided to patients having Medicaid coverage are generally paid at prospectively determined rates per discharge, per identified service or per covered member. Agreements with commercial insurance carriers, managed care and preferred provider organizations generally provide for payments based upon predetermined rates per diagnosis, per diem rates or discounted fee-for-service rates.

Management continually reviews the contractual estimation process to consider the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals. Under the revenue recognition accounting guidance, revenues are presented net of estimated contractual allowances and estimated implicit price concessions. The healthcare segment’s net revenues are based upon the estimated amounts it expects to be entitled to receive from third-party payers and patients based, in part, on Medicare and Medicaid rates as discussed above as for each of Myrtle and BSF. The healthcare segment also records estimated implicit price concessions related to uninsured accounts to record self-pay revenues at the estimated amounts it expects to collect.

The collection of outstanding receivables is the healthcare segment’s primary source of operating cash and is critical to its operating performance. The primary collection risks relate to patient accounts for which the primary insurance carrier has paid the amounts covered by the applicable agreement, but patient responsibility amounts (deductibles and copayments) remain outstanding. Implicit price concessions relate primarily to amounts due directly from patients. Accounts are written off when all reasonable internal and external collection efforts have been carried out. The estimates for implicit price concessions are based upon management’s assessment of historical write offs and expected net collections, business and economic conditions and other collection indicators.

Life Science Services

Our Life Science Services segment’s revenue consists of revenue from Vector, which was acquired on September 19, 2025. The Company recognizes revenue from the sale of high-quality bio-samples and bulk biological materials for every stage of life science research in accordance with ASC 606. Revenue is recognized when control of the promised goods or services is transferred to the customer, which generally occurs upon shipment or delivery. As a result of applying this five-step model under ASC 606, the Company recognizes revenues from its sale of products upon their transfer of control to the customer, which is considered complete at either the time of shipment or arrival at destination based upon agreed upon terms within the contract. The Company’s payment terms for the sale of standard products are typically 30 to 60 days.

Labs

The Company has recorded minor amounts of revenues from its Labs segment during the years ended December 31, 2025 and 2024. Labs currently recognizes revenue from collecting a royalty from Illumina, Inc. related to the sales of the Infinium Mouse Methylation Array.

Contractual Allowances and Doubtful Accounts Policy

In accordance with ASC, “ Revenue from Contracts with Customers (Topic 606),” including subsequently issued updates, the Company does not present “allowances for doubtful accounts” on its balance sheets, rather its accounts receivable are reported at realizable value, net of estimated contractual allowances and estimated implicit price concessions (also referred to as doubtful accounts), which are estimated and recorded in the period the related revenue is recorded. ASC, “Financial Instruments Credit Losses (Topic 326),” requires that healthcare organizations estimate credit losses on a forward-looking basis taking into account historical collection and payer reimbursement experience as an integral part of the estimation process related to contractual allowances and doubtful accounts. Receivables deemed to be uncollectible are charged against the allowance for doubtful accounts after all collection efforts have ceased or the account is settled for less than the amount originally estimated to be collected. Recoveries of receivables previously written-off are recorded as credits to the allowance for doubtful accounts. Revisions to the allowances for doubtful accounts are recorded as adjustments to revenues.

During the years ended December 31, 2025 and 2024, estimated contractual allowances and implicit price concessions of $70.0 million and $18.6 million, respectively, have been recorded as reductions to revenues and accounts receivable balances to enable the Company to record its revenues and accounts receivable at the estimated amounts it expects to collect. As required by Topic 606, after estimated contractual allowances and implicit price concessions to the health care segment’s revenues for the years ended December 31, 2025 and 2024, the Company recorded healthcare net revenues of $16.1 million and $4.0 million, respectively. Myrtle and SCCH were acquired on June 14, 2024 and September 10, 2024, respectively.

Equity-Based Compensation

In 2022, we offered equity-based compensation to employees and nonemployees in the form of stock options and restricted stock. We measure and recognize all equity-based payments to employees, service providers and board members at fair value. The cost of services received from employees and non-employees in exchange for awards of equity instruments is recognized in the consolidated statements of operations based on the estimated fair value of those awards on the grant date or reporting date, if required to be remeasured, and amortized on a straight-line basis over the requisite service period. We recognize forfeitures as incurred. We utilize a Black-Scholes valuation model to estimate the fair value of stock options and this model requires the input of assumptions, including the exercise price, volatility, expected term, discount rate, and the fair value of the underlying membership or stock on the date of grant. These inputs are provided at the grant date for an equity classified award and each measurement date for a liability classified award. Equity-based compensation awards are considered granted (i) when there is a mutual understanding of key terms, (ii) we are contingently obligated to issue the options, and (iii) the option holder begins to benefit or be adversely impacted by changes in our stock price. This primarily occurs at the time the stock option agreements are executed. The fair value of each stock option is estimated using a Black-Scholes valuation model while considering the respective rights of each type of stockholder. We did not grant stock options during the years ended December 31, 2025 and 2024, however, we had forfeitures during those years.

BUSINESS COMBINATIONS

The Company follows the guidance in ASC 805, Business Combinations for determining the appropriate accounting treatment for business acquisitions. Under ASC 805, the assets acquired, and liabilities assumed are recorded as of the acquisition date, at their respective fair values and consolidated with those of the Company. The excess of the purchase prices over the aggregate fair value of the tangible assets acquired and liabilities assumed is treated as goodwill in accordance with ASC 805. During the measurement period or until valuation studies are completed, the provisional amounts used for the purchase price allocation are subject to adjustments for a period not to exceed one year from the date of acquisition. Acquisition costs are expensed as incurred.

Going Concern

On a quarterly basis, we assess going concern uncertainty for our consolidated financial statements to determine if we have sufficient cash and cash equivalents on hand and working capital to operate for a period of at least one year from the date our consolidated financial statements are issued or are available to be issued (the “ look-forward period ”). Based on conditions that are known and reasonably knowable to us, we consider various scenarios, forecasts, projections, and estimates, and we make certain key assumptions, including the timing and nature of projected cash expenditures or programs, among other factors, and our ability to delay or curtail those expenditures or programs within the look-forward period, if necessary. Until additional equity or debt capital is secured, there is substantial doubt about the Company’s ability to continue as a going concern.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“ FASB ”) issued ASU 2023-09, Improvements to Income Tax Disclosures , which requires enhanced annual disclosures for specific categories in the rate reconciliation and income taxes paid disaggregated by federal, state and foreign taxes. ASU 2023-09 was effective for public business entities for annual periods beginning on January 1, 2025. The Company adopted ASU 2023-09 effective January 1, 2025 using a retrospective approach to all prior periods presented in these annual financial statements. Income taxes, including the enhanced annual disclosures required by ASU 2023-09, as applicable, are presented in Note 16.

In November 2024, the FASB issued ASU 2024-04, Debt with Conversions and Other Options (Subtopic 470-20), Induced Conversions of Convertible Debt Instruments. The amendments in this ASU clarify when the settlement of a debt instrument should be accounted for as an induced conversion. Under this ASU, (a) to be accounted for as an induced conversion, an inducement offer is required to preserve the form and amount of consideration issuable upon conversion in accordance with the terms of the instrument (rather than only the equity securities issuable upon conversion), (b) whether a settlement of convertible debt is an induced conversion should be assessed as of the date the inducement offer is accepted by the holder, and (c) issuers that have exchanged or modified a convertible debt instrument within the preceding 12 months (that did not result in extinguishment accounting) should use the terms that existed 12 months before the inducement offer was accepted when determining whether induced conversion accounting should be applied. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in ASU 2020-06. The amendments in this ASU permit an entity to apply the new guidance on either a prospective or a retrospective basis. The Company has not yet determined the impact of the adoption of this ASU on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-07, Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40) . The target of this update is accounting for internal use software. The amendments in this Update remove all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout Subtopic 350-40. Therefore, an entity is required to start capitalizing software costs when both of the following occur: 1. Management has authorized and committed to funding the software project. 2. It is probable that the project will be completed and the software will be used to perform the function intended (referred to as the “probable-to-complete recognition threshold”). In evaluating the probable-to-complete recognition threshold, an entity is required to consider whether there is significant uncertainty associated with the development activities of the software (referred to as “significant development uncertainty”). The two factors to consider in determining whether there is significant development uncertainty are whether:

1. The software being developed has technological innovations or novel, unique, or unproven functions or features, and the uncertainty related to those technological innovations, functions, or features, if identified, has not been resolved through coding and testing.

2. The entity has determined what it needs the software to do (for example, functions or features), including whether the entity has identified or continues to substantially revise the software’s significant performance requirements.

The amendments in this Update specify that the disclosures in Subtopic 360 10, Property, Plant, and Equipment—Overall, are required for all capitalized internal-use software costs, regardless of how those costs are presented in the financial statements. Furthermore, the amendments in this Update supersede the website development costs guidance and incorporate the recognition requirements for website-specific development costs from Subtopic 350-50 into Subtopic 350-40. Under current GAAP, entities are required to capitalize development costs incurred for internal-use software depending on the nature of the costs and the project stage during which they occur. The amendments in this ASU improve the operability of the guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods, including methods that entities may use to develop software in the future. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The amendments in this ASU permit an entity to apply the new guidance on either a prospective or a retrospective basis. The Company has not yet determined the impact of the adoption of this ASU on its consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting Topic 270 . The amendments in this Update clarify interim disclosure requirements and the applicability of Topic 270. The amendments in this Update result in a comprehensive list of interim disclosures that are required by GAAP. In developing the list of disclosures required by other Topics, the FASB focused on identifying the interim disclosures that are currently required under GAAP. The objective of the amendments is to provide clarity about the current requirements, rather than evaluate whether to expand or reduce interim disclosure requirements. The amendments in this Update also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The intent of the disclosure principle, which is modeled after a previous SEC disclosure requirement, is to help entities determine whether disclosures not specified in Topic 270 should be provided in interim reporting periods. The amendments in this Update also clarify the applicability of Topic 270, the types of interim reporting, and the form and content of interim financial statements in accordance with GAAP. The amendments in this Update are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, for public business entities. Early adoption is permitted. The amendments in this Update can be applied either (1) prospectively or (2) retrospectively to any or all prior periods presented in the financial statements. The Company has not yet determined the additional information that it will be required to provide upon adoption of this ASU.

Other recent accounting standards issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

Factors That May Adversely Affect our Results of Operations

Our results of operations 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. This risk is amplified by our current need to secure additional capital which efforts have been hindered by our inability to get approval from FINRA to complete that Corporate Action approval to execute a reverse split of our common shares on a timely basis. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, Medicare and Medicaid cost reimbursement, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, a resurgence of the COVID-19 pandemic and/or the emergence of new variants or new pandemics, cyber security risks and geopolitical instability. We cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business.