FOXO Technologies (FOXO) - 2021 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements Delwinds Insurance Acquisition Corp.'s financial statements as of March 31, 2021, detail its SPAC financial position, trust assets, and non-cash driven net income Balance Sheets The balance sheet as of March 31, 2021, shows total assets of $203.0 million, primarily in the trust account, with a reduced warrant liability Balance Sheet Summary (Unaudited) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash | $1,303,312 | $1,417,540 | | Investments and cash held in trust account | $201,264,887 | $201,250,535 | | Total Assets | $202,975,193 | $203,139,636 | | Liabilities & Equity | | | | Warrant liability | $5,814,357 | $11,010,963 | | Deferred underwriting commission | $7,043,750 | $7,043,750 | | Total Liabilities | $12,921,304 | $18,083,095 | | Common stock subject to possible redemption | $201,264,887 | $201,250,535 | | Total stockholder's equity (deficit) | ($11,210,998) | ($16,193,994) | Statement of Operations For the three months ended March 31, 2021, the company reported a net income of nearly $5.0 million, primarily from a non-cash gain on warrant liability fair value Statement of Operations for the Three Months Ended March 31, 2021 (Unaudited) | Item | Amount (USD) | | :--- | :--- | | General, administrative expense, and offering cost | $213,610 | | Loss from operations | ($213,610) | | Change in fair value of warrant liability | $5,196,606 | | Interest income | $13,302 | | Net Income | $4,997,348 | | Net Income per common share (Basic and Diluted) | $0.88 | Statement of Changes in Stockholders' Equity The company's total stockholder's deficit improved from $(16.2) million to $(11.2) million, driven by the $5.0 million net income - The stockholder's deficit decreased from $(16,193,994) at the end of 2020 to $(11,210,998) at the end of Q1 2021, primarily due to the net income of $4,997,348[17] Statement of Cash Flows For Q1 2021, net cash used in operating activities was $114,228, with cash at period-end at $1.3 million, adjusted for non-cash warrant fair value changes Cash Flow Summary for the Three Months Ended March 31, 2021 (Unaudited) | Item | Amount (USD) | | :--- | :--- | | Net cash used in operating activities | ($114,228) | | Net cash used by investing activities | $0 | | Net cash provided by financing activities | $0 | | Net change in cash | ($114,228) | | Cash at beginning of period | $1,417,540 | | Cash at end of period | $1,303,312 | Notes to Financial Statements The notes detail the company's accounting policies, SPAC formation, IPO terms, related-party transactions, commitments, and warrant liability fair value methodology - The Company is a blank check company formed to effect a business combination, with an intended focus on the insurance industry. It has 18 months from its IPO closing (December 15, 2020) to complete a business combination[23][24][35] - The company consummated its IPO of 20,125,000 units at $10.00 per unit, generating gross proceeds of $201,250,000. Simultaneously, the Sponsor purchased 632,500 private placement units for $6,325,000[26][27] - The fair value of the warrant liability decreased significantly from $11.0 million at Dec 31, 2020 to $5.8 million at March 31, 2021, resulting in a non-cash gain of $5.2 million. The valuation method for public warrants was reclassified from Level 3 to Level 1 due to the use of observable market prices[74][77] - The company has a commitment to pay deferred underwriting fees of $7,043,750, which is payable only upon the completion of a business combination[69] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's status as a blank check company, its Q1 2021 non-cash driven net income, liquidity, and contractual obligations - The company is a blank check company formed on April 27, 2020, to effect a business combination, with a focus on the insurance industry[100] Operating Results Summary | Period | Net Income / (Loss) | Key Driver | | :--- | :--- | :--- | | Quarter ended Mar 31, 2021 | $4,997,348 | $5.2M gain on warrant liability fair value | | Year ended Dec 31, 2020 | ($1,784,919) | $0.6M loss on warrant liability fair value & offering costs | - As of March 31, 2021, the company had $1,303,312 in cash available outside the trust account to fund its search for a target business and cover operating expenses[109] - The company has a contractual obligation to pay its Sponsor $10,000 per month for administrative support and owes $7,043,750 in deferred underwriting commissions, payable upon completion of a business combination[117][119] Quantitative and Qualitative Disclosures About Market Risk The company believes its market risk is minimal, as IPO proceeds in the Trust Account are invested in short-term U.S. government securities - The company's market risk is considered minimal as proceeds from the IPO are invested in short-term U.S. government securities or money market funds holding U.S. treasuries[128] Controls and Procedures Management concluded that disclosure controls were not effective as of March 31, 2021, due to a material weakness, yet financial statements are fairly presented - Management evaluated disclosure controls and procedures and concluded they were not effective as of March 31, 2021, due to a previously disclosed material weakness[130] - Notwithstanding the material weakness, management asserts that the interim financial statements are fairly presented in all material respects[131] - No changes were made to the internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, the internal controls[132] PART II – OTHER INFORMATION Legal Proceedings The company reports no legal proceedings - The company has no legal proceedings to report[135] Risk Factors The company refers to its Annual Report on Form 10-K for a detailed discussion of risk factors - For a detailed discussion of risk factors, the report refers readers to the company's previously filed Annual Report on Form 10-K[136] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities or use of proceeds - The company reports 'None' for this item[137] Defaults Upon Senior Securities The company reports no defaults upon senior securities - The company reports 'None' for this item[138] Mine Safety Disclosures This item is not applicable to the company - This item is not applicable[139] Other Information The company reports no other information - The company reports 'None' for this item[140] Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and XBRL data - Exhibits filed with the report include certifications from the Principal Executive Officer and Principal Financial Officer, as well as XBRL instance documents[142]