FOXO Technologies (FOXO) - 2022 Q4 - Annual Report

Financial Performance and Capital Requirements - The company has accumulated deficits of $147,231,000 and$ 51,976,000 as of December 31, 2022 and December 31, 2021, respectively, with net losses of $95,255,000 and$ 38,488,000 for the years ended December 31, 2022 and 2021[95]. - The company expects to require significant capital to commercialize its product and service offerings and grow its business, which may not be available on acceptable terms[100]. - The company has a history of losses and may not achieve or maintain profitability in the future, with expectations of increasing net losses in the near term due to ongoing investments[95]. - The company has significant operating costs expected to be incurred in the next twelve months, raising concerns about its ability to continue as a going concern[98]. - The company’s outstanding indebtedness includes restrictive covenants that could limit financial flexibility and impact its financial condition[120]. - The company acknowledges that changes in general economic conditions, such as interest rates, could adversely impact its operating results and capital raising ability[130]. Operational Risks and Management Changes - Recent management changes, including the departure of the CEO and COO, could disrupt operations and impair the ability to attract and retain key personnel[104]. - The company is transitioning from a research and development focus to supporting both R&D and commercial activities, facing risks and uncertainties typical of development-stage companies[118]. - The company may experience difficulties in maintaining relationships with key distributors, which could adversely affect its ability to sell products and generate revenue[179]. Market Competition and Product Development - The company intends to provide consumer engagement through its health and wellness platform, but faces increasing competition in the personal health and wellness testing market[92]. - The company faces substantial competition from larger, established companies in the life insurance industry, which may impair its ability to commercialize its products and services[159]. - The company may not be able to develop epigenetic biomarkers that attract and retain life insurance carriers as customers, which is critical for its success[92]. - The company has developed ancillary products and services, such as the "MethylSuite" software, but these are not expected to generate significant revenue[173]. - The company anticipates competition based on product efficacy, accuracy, availability, and price, which will impact its competitive position[161]. Regulatory and Compliance Challenges - The company may be subject to laws and regulations relating to laboratory testing, which could materially adversely impact its ability to offer products or services[92]. - The company faces significant regulatory compliance obligations under GDPR and UK GDPR, which could impose fines of up to 4% of global annual turnover or €20 million for serious violations[140]. - The company is subject to various data privacy laws, including the California Consumer Privacy Act (CCPA), which imposes fines of up to $7,500 per violation, potentially increasing compliance costs[186]. - Noncompliance with the General Data Protection Regulation (GDPR) could result in fines of up to €20 million or 4% of global annual revenues, impacting the company's financial condition[187]. - The company’s underwriting technology and services may be subject to FDA regulations, which could adversely affect operations if premarket review or approval is required[170]. Intellectual Property and Legal Risks - The company relies on proprietary technology and intellectual property for its business success, with a focus on protecting trade secrets related to machine learning models[194]. - The uncertainty surrounding patent and trademark prosecution in biotechnology could affect the company's ability to secure and enforce intellectual property rights[196]. - The company may face claims regarding the inventorship or ownership of its patents, which could lead to costly litigation and loss of valuable intellectual property rights[206]. - The company anticipates increased litigation related to intellectual property as the industry expands, which could divert resources and management attention[209]. - The company’s proprietary information is at risk of misappropriation, which could materially impact its competitive advantages[213]. Customer Engagement and Data Security - Security incidents or errors in systems could lead to loss of customer information and damage to the company's reputation, impacting business operations[127]. - The company is at risk of reputational harm if it fails to address customer concerns regarding privacy and security, which could affect customer retention and acquisition[131]. - The company may face reputational damage and financial harm due to potential security breaches or unauthorized disclosures of customer data[184]. Stock Performance and Market Conditions - The Class A Common Stock has traded as low as$ 0.23 per share since the Business Combination, indicating significant volatility in the market[219]. - The company is subject to continued listing standards of the NYSE American, which includes maintaining a minimum stock price of $0.20 per share[220]. - The company’s stock price may be adversely affected by negative perceptions from securities analysts or investors during intellectual property litigation[214].