JANONE INC.
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
For the quarterly period ended
June 28, 2025
or
Commission File No.
0-19621
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
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The
(The Nasdaq Capital Market)
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
x
Yes
o
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
x
Yes
o
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)
| Large accelerated filer | o | Accelerated filer | o | |||||||||||
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x | Smaller reporting company |
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| Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
o
Yes
x
No
As of August 8, 2025, there were
122,609,376
outstanding shares of the registrant’s common stock, with a par value of $0.001.
ALT5 SIGMA CORPORATION
INDEX TO FORM 10-Q
| Page | ||||||||
2
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements
ALT5 SIGMA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per-share amounts)
3
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June 28,
2025 |
December 28,
2024 |
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| (Unaudited) | |||||||||||
| Assets | |||||||||||
| Cash | $ |
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$ |
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| Trade and other receivables, net |
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| Digital assets receivable |
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| Prepaid expenses and other current assets |
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| Current assets from discontinued operations |
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| Total current assets |
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| Property and equipment, net |
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| Right of use assets |
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| Intangible assets, net |
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| Goodwill |
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| Other assets from discontinued operations |
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| Total assets | $ |
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$ |
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| Liabilities and Stockholders' Equity | |||||||||||
| Liabilities: | |||||||||||
| Accounts payable | $ |
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$ |
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| Accrued liabilities - other |
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| Digital assets payable |
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| Convertible debentures |
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| Operating lease liabilities |
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| Notes payable |
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| Related party notes payable and advances |
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| Current liabilities from discontinued operations |
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| Total current liabilities |
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| Deferred income taxes, net |
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| Notes payable |
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| Operating lease liabilities |
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| Other noncurrent liabilities |
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| Noncurrent liabilities from discontinued operations |
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| Total liabilities |
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| Commitments and contingencies (Note 9) |
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| Mezzanine equity | |||||||||||
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Convertible preferred stock, series S - par value $
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| Stockholders' equity: | |||||||||||
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Preferred stock, series A - par value $
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Preferred stock, series B - par value$
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Convertible preferred stock, series I - par value $
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Preferred stock, series M - par value $
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Preferred stock, series Q - par value $
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Convertible preferred stock, series S - par value $
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Convertible preferred stock, series V - par value $
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Common stock, par value $
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| Accumulated other comprehensive loss |
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(
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| Additional paid-in capital |
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| Accumulated deficit |
(
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(
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| Equity attributable to ALT5 Sigma Corporation shareholders |
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| Noncontrolling interest | $ |
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$ |
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| Total liabilities and stockholders' equity | $ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
ALT5 SIGMA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
(Dollars in thousands, except per-share)
| For the Thirteen Weeks Ended | For the Twenty-Six Weeks Ended | ||||||||||||||||||||||
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June 28,
2025 |
June 29,
2024 |
June 28,
2025 |
June 29,
2024 |
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| Revenues | $ |
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$ |
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$ |
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$ |
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| Cost of revenues |
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| Gross profit |
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| Operating expenses: | |||||||||||||||||||||||
| Selling, general and administrative expenses |
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| Operating loss |
(
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(
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(
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(
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| Other income (expense): | |||||||||||||||||||||||
| Interest income (expense), net |
(
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(
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(
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| Unrealized gain on exchange transactions |
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| Realized gain on exchange transactions |
(
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(
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| Unrealized loss on marketable securities |
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(
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(
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| Other income, net |
(
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(
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| Total other (expense) income, net |
(
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(
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| Loss before provision for income taxes |
(
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(
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(
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(
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| Income tax benefit |
(
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(
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(
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(
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| Net (loss) income from continuing operations |
(
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(
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(
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| Loss from discontinued operations |
(
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(
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(
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(
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| Income tax provision (benefit) for discontinued operations |
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(
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(
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| Net loss from discontinued operations |
(
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(
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(
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(
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| Net (loss) income | $ |
(
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$ |
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$ |
(
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$ |
(
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| Net loss per share: | |||||||||||||||||||||||
| Net (loss) income per share from continuing operations, basic and diluted | $ |
(
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$ |
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$ |
(
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$ |
(
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| Net (loss) income per share from continuing operations, diluted | $ |
(
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$ |
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$ |
(
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$ |
(
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| Net loss per share from discontinued operations, basic and diluted | $ |
(
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$ |
(
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$ |
(
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$ |
(
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| Net loss per share from discontinued operations, diluted | $ |
(
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$ |
(
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$ |
(
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$ |
(
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| Net (loss) income per share, basic and diluted | $ |
(
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$ |
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$ |
(
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$ |
(
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| Net (loss) income per share, basic | $ |
(
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$ |
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$ |
(
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$ |
(
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| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic |
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| Diluted |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
ALT5 SIGMA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
6
| For the Twenty-Six Weeks Ended | |||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||
| OPERATING ACTIVITIES: | |||||||||||
| Net loss from continuing operations | $ |
(
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$ |
(
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| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization |
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| Stock based compensation expense |
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| Amortization of seller note discount |
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| Unrealized loss on marketable securities |
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| Related party notes issued for shared services |
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| Amortization of ROU assets |
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| Unrealized gain on digital assets |
(
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(
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| Realized gain on digital assets |
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| Change in deferred tax liability |
(
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(
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| Changes in assets and liabilities: | |||||||||||
| Accounts receivable |
(
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| Digital assets receivable |
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(
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| Prepaid expenses and other current assets |
(
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| Accounts payable and accrued expenses |
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| Digital assets payable |
(
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| Deposits and other assets |
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| Operating cash flows from discontinued operations |
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| Net cash used in operating activities |
(
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(
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| INVESTING ACTIVITIES: | |||||||||||
| Cash acquired in ALT-5 acquisition |
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| Cash acquired in Mswipe acquisition |
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| Investing cash flows from discontinued operations |
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| Net cash provided by investing activities |
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| FINANCING ACTIVITIES: | |||||||||||
| Proceeds from equity financing, net |
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| Proceeds from related parties |
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| Proceeds from the issuance of notes payable |
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| Payments on notes payable |
(
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(
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| Proceeds from warrants exercised |
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| Payments on related party notes payable |
(
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| Financing cash flows from discontinued operations |
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| Net cash provided by financing activities |
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| Effect of changes in exchange rate on cash and cash equivalents |
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(
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| INCREASE IN CASH AND CASH EQUIVALENTS |
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| CASH AND CASH EQUIVALENTS, beginning of period |
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| LESS CASH OF DISCONTINUED OPERATIONS, end of period |
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| CASH AND CASH EQUIVALENTS, end of period | $ |
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$ |
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| Supplemental cash flow disclosures: | $ | — | |||||||||
| Cash paid for interest | $ |
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$ |
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| Noncash recognition of new leases | $ |
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$ |
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| Noncash financing and investing activities: | |||||||||||
| Common stock issued for the acquisition of ALT-5 subsidiary | $ |
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$ |
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| Common stock issued for consulting services | $ |
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$ |
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| Common stock issued for liability obligations | $ |
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$ |
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| Notes payable converted to common stock | $ |
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$ |
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| Common stock issued for property and equipment | $ |
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$ |
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| Common stock issued for the acquisition of Mswipe | $ |
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$ |
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| Common stock warrants issued for the acquisition of Mswipe | $ |
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$ |
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| Alyea common stock issued for the acquisition of Mswipe | $ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
ALT5 SIGMA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
(Dollars in thousands)
| Series A-1 Preferred | Series S-1 Preferred | Series B Preferred | Series I Preferred | Series M Preferred | Series Q Preferred | Series V Preferred | Common Stock |
Additional
Paid-in Capital |
Accumulated
Deficit |
Accumulated
Other Comprehensive Deficit |
Noncontrolling Interest |
Total
Stockholders' Equity |
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| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 28, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
(
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$ |
(
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$ |
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$ |
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| Common stock issued for warrants exercised | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
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— |
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— | — | — |
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| Common stock issued for Series V Preferred converted | — | — | — | — | — | — | — | — | — | — | — | — |
(
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— |
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— | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for consulting agreement | — | — | — | — | — | — | — | — | — | — | — | — | 0 | — |
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— |
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— | — | — |
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| Foreign currency adjustment | — | — | — | — | — | — | — | — | — | — | — | — | 0 | — | — | — | — | — |
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— |
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| Net loss | — | — | — | — | — | — | — | — | — | — | — | — | 0 | — | — | — | — |
(
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— |
(
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(
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| Balance, March 29, 2025 |
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(
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| Balance, March 29, 2025 |
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(
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| Series A-1 adjustment |
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— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of Series A-1 Preferred |
(
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— | — | — | — | — | — | — | — | — | — | — | — | — |
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— | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ALT5 Sigma Corp common stock issued for RSU's granted | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
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— | — | — |
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| ALT5 Sigma Corp common stock issued for note payable obligations | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
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— | — | — |
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| ALT5 Sigma Corp common stock issued for consulting agreement | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
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— |
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— | — | — |
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| ALT5 Sigma Corp common stock issued for Mswipe acquisition | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
|
— |
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— | — | — |
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| ALT5 Sigma Corp common stock warrants for Mswipe acquisition | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
|
— | — | — |
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| Alyea common stock warrants for Mswipe acquisition | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
|
— | — | — |
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| Common stock issued for Series Q convertible stock converted | — | — | — | — | — | — | — | — | — | — |
(
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(
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— | — |
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— |
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— | — | — |
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| ALT5 Sigma Corp common stock issued for professional services | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
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— |
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— | — | — |
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| Foreign currency adjustment | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
|
— |
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| Net loss | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
(
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— |
(
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(
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| Balance, June 28, 2025 |
-
|
-300 | $ |
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100000 | $ |
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34207 | $ |
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17000 | $ |
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3200 | $ |
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732460 | $ |
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0 | $ |
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$ |
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$ |
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$ |
(
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$ |
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$ |
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$ |
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8
| Series A-1 Preferred | Series S-1 Preferred | Series B Preferred | Series M Preferred | Common Stock |
Additional
Paid-in Capital |
Accumulated
Deficit |
Accumulated
Other Comprehensive Deficit |
Total
Stockholders' Equity |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 30, 2023 |
|
$ |
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$ |
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$
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$
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$ |
|
$ |
|
$ |
(
|
$ |
|
$ |
(
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share based compensation | — | — | — | — | — | — | — | — | — | — |
|
— | — |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reclassification of Series S stock to liability | — | — | — | — | — | — | — | — | — | — |
(
|
— | — |
(
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reclassification of Series S stock to permanent equity | — | — | — | — | — | — | — | — | — | — | — | — | — |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for equity financing | — | — | — | — | — | — | — | — |
|
|
|
— | — |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for consulting agreement | — | — | — | — | — | — | — | — |
|
— |
|
— | — |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued in lieu of notes payable obligation | — | — | — | — | — | — | — | — |
|
|
|
— | — |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for RSU's granted | — | — | — | — | — | — | — | — |
|
— | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | — | — | — |
(
|
— |
(
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
(
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share based compensation | — | — | — | — | — | — | — | — |
|
— |
|
— | — |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for acquisition of Alt5 Subsidiary | — | — | — | — | — | — | — | — |
|
|
|
— | — |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series B preferred stock issued for acquisition of Alt5 Subsidiary | — | — | — | — |
|
|
|
— | — | — | — | — | — |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of note receivable to common stock | — | — | — | — | — | — | — | — |
|
— |
|
— | — |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for equity financing | — | — | — | — | — | — | — | — |
|
— |
|
— | — |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of Series A-1 to common stock |
(
|
— | — | — | — | — | — | — |
|
— | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for consulting agreement | — | — | — | — | — | — | — | — |
|
|
|
— | — |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for property and equipment | — | — | — | — | — | — | — | — |
|
— |
|
— | — |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency adjustment | — | — | — | — | — | — | — | — | — | — | — |
(
|
(
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — |
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 29, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9
Note 1:
Background
The accompanying consolidated financial statements include the accounts of ALT5 Sigma Corporation, a Nevada corporation, and its subsidiaries (collectively, the “Company” or “ALT5”). Effective July 15, 2024, the Company changed its corporate name from “JanOne Inc.” to “ALT5 Sigma Corporation,” and also changed its Nasdaq common stock ticker symbol from “JAN” to “ALTS”. The corporate name change was effected through a parent/subsidiary short-form merger of ALT5 Sigma Corporation, the Company’s wholly-owned Nevada subsidiary formed solely for the purpose of effectuating the name change), whereby it merged with and into the Company, with the Company being the surviving entity, albeit with its new name.
The Company had
two
operating segments – Fintech, Biotechnology, and Corporate and Other. In connection with a partial or complete spinoff of its subsidiary, Alyea Therapeutics Corporation (“Alyea”), the accounts for the Biotechnology segment have been presented as discontinued operations in the accompanying consolidated financial statements.
Fintech
On May 15, 2024, the Company acquired ALT5 Sigma, Inc. (“ALT5 Subsidiary”). ALT5 Subsidiary is a fintech company that provides next generation blockchain-powered technologies to enable a migration to a new global financial paradigm. ALT5 Subsidiary, through its respective subsidiaries, offers two main platforms to its customers: “ALT5 Pay” and “ALT5 Prime.” ALT5 Pay is a crypto-currency payment gateway that enables registered and approved global merchants to accept and make crypto-currency payments or to integrate the ALT5 Pay payment platform into their application or operations using the plugin with WooCommerce and/or ALT5 Pay’s checkout widgets and APIs. Merchants have the option to convert to fiat currency (US Dollars, Canadian Dollars, Euros, and British Pounds Sterling) automatically or to receive their payment in digital assets (see Note 3).
On May 9, 2025, the Company acquired Mswipe. Mswipe is a next-generation payment solutions provider offering multi-currency, fiat payment card services, along with crypto-enabled capabilities through its existing integration with the ALT5 Subsidiary platform. Its suite of physical and virtual cards, available on both the Visa
®
and Mastercard® networks, allows users to seamlessly spend traditional and digital currencies worldwide (see Note 3).
Biotechnology
During September 2019, the Company, through its biotechnology segment, broadened its business perspectives to become a pharmaceutical company focused on finding treatments for conditions that cause severe pain and bringing to market drugs with non-addictive pain-relieving properties. Effective December 28, 2022, the Company acquired Soin Therapeutics LLC, a Delaware limited liability company (“STLLC”), and its product, a patent-pending, novel formulation of low-dose naltrexone (“JAN123”). The product is being developed for the treatment of Complex Regional Pain Syndrome (CRPS), an indication that causes severe, chronic pain generally affecting the arms or legs. At present, there are no truly effective treatments for CRPS. Because of the relatively small number of patients afflicted with CRPS, the FDA has granted Orphan Drug Designation for any product approved for treatment of CRPS. This designation will provide the Company with tax credits for its clinical trials, exemption of user fees, and the potential of
seven years
of market exclusivity following approval. In addition, development of orphan drugs currently also involves smaller trials and quicker times to approval, given the limited number of patients available to study. However, there can be no assurance that the product will receive FDA approval or that it will result in material sales. In that regard, we have previously announced our intention to capitalize a subsidiary with certain of our biotechnology assets, acquire an additional biotechnology asset, and then engage in a financing of that subsidiary. The short-term intended result of that series of transactions would be for us to own a controlling interest in that subsidiary, but to decouple it from us so that it would operate on a stand-alone basis. In connection with the Company's spinoff of Alyea, accounts for the Biotechnology segment have been presented as discontinued operations in the accompanying consolidated financial statements (see Note 4).
Corporate and Other
Our Corporate and Other segment consists of certain corporate general and administrative costs.
10
Note 2:
Summary of Significant Accounting Policies
B
asis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all of the information and notes required for complete financial statements prepared in conformity with U.S. GAAP. In our opinion, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. However, the Company’s results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the consolidated financial statements and notes thereto included in our Form 10-K for the fiscal year ended December 28, 2024.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumption that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Significant estimates made in connection with the accompanying consolidated financial statements include the fair value in connection with the Series S convertible preferred stock issued in the Soin merger, valuation allowance against deferred tax assets, and estimated useful lives for intangible assets.
Financial Instruments
Financial instruments consist primarily of cash, trade and other receivables, and obligations under accounts payable, accrued expenses and notes payable. The carrying amounts of trade and other receivables, accounts payable, accrued expenses and short-term notes payable approximate fair value because of the short maturity of these instruments.
Digital Assets and other Receivables
Digital Assets and other Payables
Revenue Recognition
Revenue recognition applies to the Company’s Fintech segment only, as the Company’s Biotech segment has not recognized revenue to date. Revenue is recognized under Topic 606 in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:
1.
Executed contracts with the Company’s customers that it believes are legally enforceable;
2.
Identification of performance obligations in the respective contract;
11
3.
Determination of the transaction price for each performance obligation in the respective contract;
4.
Allocation of the transaction price to each performance obligation; and
5.
Recognition of revenue only when the Company satisfies each performance obligation.
These five elements, as applied to each of the Company’s revenue category, are summarized below:
1.
Product sales – revenue is recognized at the time of sale of equipment to the customer.
2.
Service sales – revenue is recognized based on when the service has been provided to the customer.
The Company’s service is comprised of a single performance obligation to buy and sell or convert digital assets to currencies. That is, the Company is the counter-party to all transactions between customers and liquidity providers and presents revenue for the fees earned on a net basis.
The Company is acting as principal in all transactions, and control the digital assets being provided before it is transferred to the buyer, and has risk related to the digital assets, and is responsible for the fulfillment of the digital asset transactions. The Company sets the price for the digital assets by aggregating prices from several liquidity providers and displays them on the Company’s platform. As a result, the Company acts as a price discovery service and acts as a principal facilitating the ability for a customer to purchase or sell digital assets.
The Company considers its performance obligation satisfied, and recognizes revenue, at the point in time that the transaction is processed. Contracts with customers are usually open-ended and can be terminated by either party without a termination penalty. Therefore, contracts are defined at the transaction level and do not extend beyond the service already provided.
The Company charges a fee at the transaction level. The transaction price, represented by the trading fee, is calculated based on volume and varies depending on payment type and the value of the transaction. Digital asset purchases or sale transactions executed by a customer on the Company’s platform is based on tiered-pricing that is driven primarily by transaction volume processed for a specific historical period. The Company has concluded that this volume-based pricing approach does not constitute a future material right since the discount is within a range typically offered to a class of customers with similar volume. The transaction fee is collected from the customer at the time the transaction is executed. In certain instances, the transaction fee can be collected in digital assets, with revenue measured based on the amount of digital assets received and the fair value of the digital assets at the time of the transaction. The Company also marks up or down the digital asset prices and earns revenue from the spread between the buying and selling price. The Company also earns a fee from transfers of currencies and or digital assets. The transfer fees are nominal and are set to offset the fees associated with banking and/or blockchain mining fees.
Stock-Based Compensation
The Company from time to time grants restricted stock units, warrants, and stock options to employees, non-employees, and Company executives and directors. Such awards are valued based on the grant date fair-value of the instruments. The value of each award is amortized on a straight-line basis over the vesting period.
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (
“
ASU
”
) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (
“
ASU 2023-07
”
). ASU 2023-07 requires, among other updates, enhanced disclosures about significant segment expenses that are regularly provided to the CODM, as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective adoption. Early adoption is permitted. The Company does not anticipate this guidance will have a material impact upon its financial position and results of operations.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (
“
ASU 2023-09
”
). ASU 2023-09 requires enhanced annual disclosures regarding the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, and may be adopted on a
12
prospective or retrospective basis. Early adoption is permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.
Note 3:
Mergers and Acquisitions
Mswipe
Effective on May 9, 2025, the Company and our indirect, wholly-owned second-tier Canadian subsidiary entered into an agreement to purchase all of the outstanding capital stock of an entity that, through its subsidiaries, offers multi-currency, fiat- and crypto-enabled payment card services. The business trades under the name Mswipe. Through a suite of physical and virtual cards that are available on both the Visa
®
and Mastercard
®
networks, the acquired operations enable users seamlessly to spend traditional and digital currencies across the globe. The acquired platform is built with robust compliance frameworks, advanced security protocols, and real-time exchange capabilities, which allow for fast, secure, and borderless transactions. This is a B2B solution, which, when combined with our current solutions, bridges the gap between the crypto economy and traditional financial systems—while ensuring regulatory alignment, interoperability with existing payment networks, and a seamless user experience for institutional partners and their end-users.
The purchase price for this transaction consisted of our (i) issuing
one million
restricted shares of our common stock to the
three
sellers, valued at the Historical NOCP on May 9, 2025 of $
6.10
, (ii) granting
five hundred thousand
four-year
common stock warrants to the
three
sellers, with a per-share exercise price of $
5.50
(which was the approximate market price at the time that we reached an agreement in principal for this transaction), (iii) issuing shares to
two
of the sellers in “Alyea Therapeutics Corporation,” our biotech business that we are in process of separating from our core business, which shares we valued at $
4.8
million, and (iv) issuing
two
14-month
straight promissory notes in the aggregate initial principal balance of approximately
one million
dollars with an interest rate at the AFR for quarterly compounded notes of
3.99
% per annum and all principal and interest due at the maturity date. We also are acknowledging an equivalent
14-month
term straight promissory note at the acquired company level that pre-dated our acquisition. The principal balance as of May 9, 2025 was approximately $
5.1
million and the interest was reset to match that of the
two
notes that we issued. We also granted the sellers the right to
one
earn-out payment in the amount of $
20
million (payable in cash or unregistered shares of our common stock) right if the Operating Subsidiaries generate a minimum of $
15
million in annualized or actual total revenue from the assets owned by the Operating subsidiaries at May 9, 2025.
The fair value of the purchase price components outlined above was $
14.2
million due to fair value adjustments for the contingent consideration, cash acquired, and working capital adjustments, as detailed below (in $000's):
| ALT5 Common stock | $ |
|
||||||
| Common stock warrants |
|
|||||||
| Seller notes |
|
|||||||
| Alyea Common Stock |
|
|||||||
| Total purchase price | $ |
|
||||||
Under the preliminary purchase price allocation, the Company recognized goodwill of approximately $
6.4
million, which is calculated as the excess of both the consideration exchanged and liabilities assumed as compared to the fair value of the identifiable assets acquired. The values assigned to the assets acquired and liabilities assumed are based on their estimates of fair value available as of May 9, 2025, as calculated by an independent third-party firm. Because the transaction was considered a stock purchase for tax purposes, none of the goodwill arising from the acquisition will deductible for tax
13
purposes.
The table below outlines the purchase price allocation of the purchase for PMW to the acquired identifiable assets, liabilities assumed and goodwill (in $000’s):
| Total purchase price | $ |
|
|||||||||
| Accounts payable |
|
||||||||||
| Total liabilities assumed |
|
||||||||||
| Total consideration |
|
||||||||||
| Cash |
|
||||||||||
| Accounts receivable |
|
||||||||||
| Property and equipment |
|
||||||||||
| Intangible assets | |||||||||||
| Customer relationships |
|
||||||||||
| Trade names |
|
||||||||||
| Developed technology |
|
||||||||||
| Subtotal intangible assets |
|
||||||||||
| Other |
|
||||||||||
| Total assets acquired |
|
||||||||||
| Total goodwill |
|
||||||||||
Proforma Information
The table below presents selected proforma information for the Company for the 13 and 26 weeks ended June 28, 2025 and June 29, 2024, assuming that the acquisition had occurred on December 31, 2023 (the beginning of the Company’s 2024 fiscal year), pursuant to ASC 805-10-50. This proforma information does not purport to represent what the actual results of operations of the Company would have been had the acquisition occurred on that date, nor does it purport to predict the results of operations for future periods (in $000’s).
14
| As Reported | Adjustments | Proforma | |||||||||||||||||||||
| ALT5 Sigma Corporation Unaudited 13 weeks ended June 28, 2025 | Mswipe Unaudited 13 weeks ended June 28, 2025 | Adjustments(1) | ALT5 Sigma Corporation for the 13 weeks ended June 28, 2025 | ||||||||||||||||||||
| Net revenue | $ |
|
$ |
|
$ |
|
|||||||||||||||||
| Net income | $ |
(
|
$ |
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Earnings per basic common share | $ |
(
|
$ |
(
|
|||||||||||||||||||
| Earnings per basic diluted share | $ |
(
|
$ |
(
|
|||||||||||||||||||
| As Reported | Adjustments | Proforma | |||||||||||||||||||||
| ALT5 Sigma Corporation Unaudited 13 weeks ended June 29, 2024 | Mswipe Unaudited 13 weeks ended June 29, 2024 | Adjustments(1) | ALT5 Sigma Corporation for the 13 weeks ended June 29, 2024 | ||||||||||||||||||||
| Net revenue | $ |
|
$ |
|
$ |
|
|||||||||||||||||
| Net income | $ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||
| Earnings per basic common share | $ |
|
$ |
|
|||||||||||||||||||
| Earnings per basic diluted share | $ |
|
$ |
|
|||||||||||||||||||
| As Reported | Adjustments | Proforma | |||||||||||||||||||||
| ALT5 Sigma Corporation Unaudited 26 weeks ended June 28, 2025 | Mswipe Unaudited 26 weeks ended June 28, 2025 | Adjustments(1) | ALT5 Sigma Corporation for the 26 weeks ended June 28, 2025 | ||||||||||||||||||||
| Net revenue | $ |
|
$ |
|
$ |
|
|||||||||||||||||
| Net income | $ |
(
|
$ |
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Earnings per basic common share | $ |
(
|
$ |
(
|
|||||||||||||||||||
| Earnings per basic diluted share | $ |
(
|
$ |
(
|
|||||||||||||||||||
| As Reported | Adjustments | Proforma | |||||||||||||||||||||
| ALT5 Sigma Corporation Unaudited 26 weeks ended June 29, 2024 | Mswipe Unaudited 26 weeks ended June 29, 2024 | Adjustments(1) | ALT5 Sigma Corporation for the 26 weeks ended June 29, 2024 | ||||||||||||||||||||
| Net revenue | $ |
|
$ |
|
$ |
|
|||||||||||||||||
| Net income | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Earnings per basic common share | $ |
(
|
$ |
(
|
|||||||||||||||||||
| Earnings per basic diluted share | $ |
(
|
$ |
(
|
|||||||||||||||||||
(1)
Adjustments are related to adjustments made for the following:
•
Amortization expense of definite-lived intangible assets has been adjusted based on the preliminary fair value at the acquisition date.
Qoden
On November 8, 2024, the Company acquired the Qodex Cryptocurrency Exchange Software platform and other related assets from Qoden Technologies, LLC, a provider of technology solutions for the blockchain industry. The purchase price was $
2.2
million, consisting of $
2.0
million, or
771,010
shares, of the Company’s Series Q Convertible Preferred Stock and $
0.2
million in cash. The Series Q Convertible Stock was valued at $
2.594
per share on the date issued, and is subject to a mandatory eight-calendar-quarter leak-out, such that no more than twelve-and-one-half percent of the shares may be converted into shares of the Company’s common stock on a trailing quarterly basis over a period of
two years
, and are subject to vesting provisions. The $
0.2
million in cash is payable in increments of $
10,000
per month for 24 months,
15
commencing on the first day of the month following closing. The acquisition was determined to be an asset acquisition for accounting purposes.
ALT5
On May 14, 2024, the Company acquired its ALT5 Subsidiary, which is a fintech company that provides next generation blockchain-powered technologies to enable a migration to a new global financial paradigm. ALT5 Subsidiary, through its respective subsidiaries, offers two main platforms to its customers: “ALT5 Pay” and “ALT5 Prime.” ALT5 Pay is a crypto-currency payment gateway that enables registered and approved global merchants to accept and make crypto-currency payments or to integrate the ALT5 Pay payment platform into their application or operations using the plugin with WooCommerce and/or ALT5 Pay’s checkout widgets and APIs. Merchants have the option to convert to fiat currency (US Dollars, Canadian Dollars, Euros, and British Pounds Sterling) automatically or to receive their payment in digital assets.
As consideration under the acquisition, the Company issued
1,799,100
shares of its common stock to the legacy equity holders of the capital stock of ALT5 Subsidiary. Those shares represented approximately
19.9
% of the Company's then-issued and outstanding shares of common stock. Each of the shares of the Company's newly-issued common stock was valued at $
4.14
, which was the Nasdaq Historical NOCP on Thursday, May 9, 2024, the day immediately prior to the date on which the agreement was executed. The Company also issued
34,207
shares of its newly-designated Series B Preferred Stock (the “Series B Stock”) to the legacy equity holders of the capital stock of ALT5. In connection with the closing of the acquisition of ALT5 Subsidiary, the Company also issued
3,200
shares of its newly-designated Series M Preferred Stock (the “Series M Stock”) to
two
entities that acted as finders for the transaction.
The fair value of the purchase price components outlined above was $
16.0
million due to fair value adjustments for the shares of Series B Stock and Series M Stock, as detailed below (in $000’s):
| Common stock | $ |
|
||||||
| Series B preferred stock |
|
|||||||
| Total purchase price | $ |
|
||||||
Under the preliminary purchase price allocation, the Company recognized goodwill of approximately $
11.7
million, which is calculated as the excess of both the consideration exchanged and liabilities assumed as compared to the fair value of the identifiable assets acquired. The values assigned to the assets acquired and liabilities assumed are based on their estimates of fair value available as of May 10, 2024, as calculated by an independent third-party firm. Because the transaction was considered a stock purchase for tax purposes,
none
of the goodwill arising from the acquisition will be deductible for tax purposes. During the year ended December 28, 2024, the Company recorded a noncash fair value adjustment related to deferred tax liabilities and other liabilities acquired in the aggregate amount of approximately $
7.9
million, which was
16
recorded to goodwill.
The table below outlines the purchase price allocation of the purchase for ALT5 Subsidiary to the acquired identifiable assets, liabilities assumed and goodwill (in $000’s):
| Total purchase price | $ |
|
|||||||||
| Accounts payable |
|
||||||||||
| Accrued liabilities |
|
||||||||||
| Digital assets payable |
|
||||||||||
| Debt |
|
||||||||||
| Total liabilities assumed |
|
||||||||||
| Total consideration |
|
||||||||||
| Cash |
|
||||||||||
| Accounts receivable |
|
||||||||||
| Digital assets receivable |
|
||||||||||
| Intangible assets | |||||||||||
| Customer relationships | $ |
|
|||||||||
| Trade names |
|
||||||||||
| Developed technology |
|
||||||||||
| Subtotal intangible assets |
|
||||||||||
| Other |
|
||||||||||
| Total assets acquired |
|
||||||||||
| Total goodwill | $ |
|
|||||||||
The table below presents selected proforma information for the Company for the thirteen and twenty-six week periods ended June 29, 2024, assuming that the acquisition had occurred on January 1, 2023 (the beginning of the Company’s 2023 fiscal year), pursuant to ASC 805-10-50 (in $000's). This proforma information does not purport to represent what the actual results of operations of the Company would have been had the acquisition occurred on that date, nor does it purport to predict the results of operations for future periods.
| As Reported | Adjustments | Proforma | |||||||||||||||||||||
| ALT5 Sigma Corporation Unaudited 13 weeks ended June 29, 2024 | ALT5 Subsidiary Unaudited 13 weeks ended June 29, 2024 | Adjustments(1) | ALT5 Sigma Corporation for the 13 weeks ended June 29, 2024 | ||||||||||||||||||||
| Net revenue | $ |
|
$ |
|
$ |
|
|||||||||||||||||
| Net income | $ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||
| Earnings per basic common share | $ |
|
$ |
|
|||||||||||||||||||
| Earnings per basic diluted share | $ |
|
$ |
|
|||||||||||||||||||
| As Reported | Adjustments | Proforma | |||||||||||||||||||||
| ALT5 Sigma Corporation Unaudited 26 weeks ended June 29, 2024 | ALT5 Subsidiary Unaudited 26 weeks ended June 29, 2024 | Adjustments(1) | ALT5 Sigma Corporation for the 26 weeks ended June 29, 2024 | ||||||||||||||||||||
| Net revenue | $ |
|
$ |
|
$ |
|
|||||||||||||||||
| Net income | $ |
(
|
$ |
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Earnings per basic common share | $ |
(
|
$ |
(
|
|||||||||||||||||||
| Earnings per basic diluted share | $ |
(
|
$ |
(
|
|||||||||||||||||||
(1)
Adjustments are related to adjustments made for the following:
•
Amortization expense of definite-lived intangible assets has been adjusted based on the preliminary fair value at the acquisition date.
17
Note 4:
Discontinued Operations
As of June 28, 2025, the Company discontinued operations of its Biotechnology segment as follows:
On May 21, 2025, the Company disclosed that June 2, 2025 would be the record date for a transaction involving the Company’s formal separation of its healthcare assets, known as Alyea, and that the scope and method of a partial or full
18
disposition of its interests in Alyea, whether as a split-off or a spin-off or another related transaction, would be subsequently announced.
In accordance with the provisions of ASC 360-10 and ASC 205-20, the Company has separately reported the assets and liabilities of the discontinued operations in the consolidated balance sheets.
The assets and liabilities have been reflected as discontinued operations in the consolidated balance sheet, as of December 28, 2024, and consists of the following:
| June 28, 2025 | December 28, 2024 | ||||||||||
| Assets from discontinued operations | |||||||||||
| Trade and other receivables, net |
|
$ |
|
||||||||
| Prepaid expenses and other current assets |
|
$ |
|
||||||||
| Total current assets from discontinued operations |
|
|
|||||||||
|
Property and equipment, net
1
|
|
|
|||||||||
|
Intangible assets, net
2
|
|
|
|||||||||
| Deposits and other assets |
|
|
|||||||||
| Total other assets from discontinued operations |
|
|
|||||||||
| Total assets from discontinued operations | $ |
|
$ |
|
|||||||
| Liabilities from discontinued operations | |||||||||||
| Accounts payable | $ |
|
$ |
|
|||||||
|
Accrued liabilities - other
3
|
|
$ |
|
||||||||
| Total current liabilities from discontinued operations |
|
|
|||||||||
| Deferred income taxes |
|
|
|||||||||
| Total noncurrent liabilities from discontinued operations |
|
|
|||||||||
| Total liabilities from discontinued operations | $ |
|
$ |
|
|||||||
1
The Company’s property and equipment consisted of the following:
| June 28, 2025 | December 28, 2024 | ||||||||||
| Projects under construction |
|
$ |
|
||||||||
| Property and equipment |
|
|
|||||||||
| Less accumulated depreciation |
|
|
|||||||||
| Total property and equipment, net, from discontinued operations | $ |
|
$ |
|
|||||||
2
The Company’s intangible assets consisted of the following:
|
June 28,
2025 |
December 28,
2024 |
||||||||||
| Soin intangible | $ |
|
$ |
|
|||||||
| Intangible assets |
|
|
|||||||||
| Less accumulated amortization |
(
|
(
|
|||||||||
| Total intangible assets | $ |
|
$ |
|
|||||||
Amortization expense was $
0.5
million and $
0.5
million for the 13 weeks ended June 28, 2025 and June 29, 2024, respectively, and $
1.1
million and $
1.1
million for the 26 weeks ended June 28, 2025 and June 29, 2024, respectively.
Soin Intangible Assets
Effective as of December 28, 2022, the Company acquired Soin Therapeutics LLC, a Delaware limited liability company (“STLLC”), and its product, a patent-pending, novel formulation of low-dose naltrexone. The assets acquired by the
19
Company consist of 1)
three
pending patents related to the methods of using low-dose Naltrexone to treat chronic pain, 2) final formula for Naltrexone, and 3) orphan drug designation as approved by the FDA. The Company reviewed the assets acquired and determined that no in-process research and development costs were acquired as part of the transaction, and, thus, all assets acquired represent intellectual property and should be capitalized. The Company will amortize the intangible assets ratably over a
10
-year period.
3
The Company’s accrued liabilities consisted of the following:
|
June 28,
2025 |
December 28,
2024 |
||||||||||
| Due to Dr. Soin | $ |
|
$ |
|
|||||||
| Total accrued expenses | $ |
|
$ |
|
|||||||
In accordance with the provisions of ASC 360-10 and ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the consolidated statements of operations and comprehensive income (loss).
The results of operations for this entity for the 26 weeks ended June 28, 2025 and
20
June 29, 2024 have been reflected as discontinued operations in the consolidated statements of operations and comprehensive income (loss) and consist of the following:
| 13 Weeks Ended | 26 Weeks Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Revenues | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Cost of revenues |
|
|
|
|
|||||||||||||||||||
| Gross profit |
|
|
|
|
|||||||||||||||||||
| Operating expenses from discontinued operations: | |||||||||||||||||||||||
| Selling, general and administrative expenses |
|
|
|
|
|||||||||||||||||||
| Total operating expenses from discontinued operations |
|
|
|
|
|||||||||||||||||||
| Operating loss from discontinued operations |
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Other income (expense) from discontinued operations | |||||||||||||||||||||||
| Total other income (loss), net |
|
|
$ |
|
$ |
|
|||||||||||||||||
| Loss before provision for income taxes from discontinued operations |
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Income tax provision (benefit) |
|
(
|
|
(
|
|||||||||||||||||||
| Net loss from discontinued operations | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
In accordance with the provisions of ASC 360-10 and ASC 205-20, the Company has separately reported the cash flow activity of the discontinued operations in the consolidated statements of cash flows.
The cash flow activity from discontinued operations for the 26 weeks ended June 28, 2025 and June 29, 2024 have been reflected as discontinued operations in the consolidated statements of cash flows and consist of the following:
| 26 weeks ended | |||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||
| DISCONTINUED OPERATING ACTIVITIES: | |||||||||||
| Net loss from discontinued operations |
(
|
(
|
|||||||||
| Depreciation and amortization |
|
|
|||||||||
| Change in deferred taxes |
|
|
|||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts payable and accrued expenses |
(
|
(
|
|||||||||
| Net cash used in operating activities from discontinued operations | $ |
|
$ |
|
|||||||
| DISCONTINUED INVESTING ACTIVITIES: | |||||||||||
| Net cash used in investing activities from discontinued operations | $ |
|
$ |
|
|||||||
| DISCONTINUED FINANCING ACTIVITIES: | |||||||||||
| Net cash used in financing activities from discontinued operations | $ |
|
$ |
|
|||||||
| Effect of changes in exchange rate on cash and cash equivalents |
|
|
|||||||||
| DECREASE IN CASH AND CASH EQUIVALENTS |
|
|
|||||||||
| CASH AND CASH EQUIVALENTS, beginning of period |
|
|
|||||||||
| CASH AND CASH EQUIVALENTS, end of period | $ |
|
$ |
|
|||||||
21
Note 5:
Trade and other receivables
The Company’s trade and other receivables as of June 28, 2025 and December 28, 2024, respectively, were as follows (in $000’s):
|
June 28,
2025 |
December 28,
2024 |
||||||||||
| Other receivables | $ |
|
$ |
|
|||||||
| Trade and other receivables, net | $ |
|
$ |
|
|||||||
Note 6:
Prepaids and other current assets
Prepaids and other current assets as of June 28, 2025 and December 28, 2024 consist of the following (in $000’s):
|
June 28,
2025 |
December 28,
2024 |
||||||||||
| Prepaid other | $ |
|
$ |
|
|||||||
| Total prepaid expenses and other current assets | $ |
|
$ |
|
|||||||
Note 7:
Property and Equipment
Property and equipment as of June 28, 2025 and December 28, 2024 consist of the following (in $000’s):
| June 28, 2025 | December 28, 2024 | |||||||||||||
| Equipment | $ |
|
$ |
|
||||||||||
| Total property and equipment, net | $ |
|
$ |
|
||||||||||
Note 8:
Leases
In connection with its acquisition of ALT5 Subsidiary (see Note 3), the Company leases commercial office space. These assets and properties are leased under non-cancellable agreements that expire at various future dates. The agreements, which have been classified as operating leases, provide for minimum rent and require the Company to pay all insurance, taxes, and other maintenance costs. As a result, the Company recognizes assets and liabilities for leases with lease terms greater than 12 months. The amounts recognized reflect the present value of remaining lease payments for all leases. The discount rate used is an estimate of the Company’s blended incremental borrowing rate based on information available associated with each subsidiary’s debt outstanding at lease commencement. In considering the lease asset value, the Company considers fixed and variable payment terms, prepayments and options to extend, terminate or purchase. Renewal, termination, or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised.
The following table details the Company’s right of use assets and lease liabilities as of June 28, 2025 and December 28, 2024 (in $000’s):
| June 28, 2025 | December 28, 2024 | ||||||||||
| Right of use asset - operating leases | $ |
|
$ |
|
|||||||
| Lease liabilities: | |||||||||||
| Current - operating |
|
|
|||||||||
| Long term - operating |
|
|
|||||||||
As of June 28, 2025, the weighted average remaining lease term for operating leases is
4.4
years. The Company’s weighted average discount rate for operating leases is
12.8
%. Total cash payments for operating leases for the 13 weeks ended June 28, 2025 was approximately $
11,000
.
No
cash payments for operating leases were made during the 13 weeks ended June
22
29, 2024. Additionally, the Company recognized approximately
no
right of use assets or lease liabilities during the 13 weeks ended June 28, 2025.
Total present value of future lease payments of operating leases as of June 28, 2025 (in $000’s):
| Twelve months ended | |||||
| 2026 | $ |
|
|||
| 2027 |
|
||||
| 2028 |
|
||||
| 2029 |
|
||||
| 2030 |
|
||||
| Total |
|
||||
| Less implied interest |
(
|
||||
| Present value of payments | $ |
|
|||
Note 9:
Intangible Assets
Intangible assets as of June 28, 2025 and December 28, 2024 consist of the following (in $000’s):
|
June 28,
2025 |
December 28,
2024 |
||||||||||
| Noncompete | $ |
|
$ |
|
|||||||
| Qoden intangible |
|
|
|||||||||
| Patents and domains |
|
|
|||||||||
| Trade names |
|
|
|||||||||
| Customer relationships |
|
|
|||||||||
| Developed technology |
|
|
|||||||||
| Intangible assets |
|
|
|||||||||
| Less accumulated amortization |
(
|
(
|
|||||||||
| Total intangible assets | $ |
|
$ |
|
|||||||
Intangible amortization expense was $
0.8
million and $
0.2
million for the 13 weeks ended June 28, 2025 and June 29, 2024, respectively, and $
1.6
million and $
0.2
million for the 26 weeks ended June 28, 2025 and June 29, 2024, respectively.
Mswipe
Effective on May 9, 2025, the Company and our indirect, wholly-owned second tier Canadian subsidiary entered into an agreement to purchase all of the outstanding capital stock of an entity that, through its subsidiaries, offers multi-currency, fiat- and crypto-enabled payment card services (see Note 3).
Qoden Intangible Assets
On November 8, 2024, the Company acquired the Qodex Cryptocurrency Exchange Software platform and other related assets from Qoden Technologies, LLC, a provider of technology solutions for the blockchain industry. The Company will amortize the intangible assets over a
two-year
period (see Note 3).
ALT5 Subsidiary Intangible Assets
On May 14, 2024, the Company acquired its ALT5 Subsidiary, which is a fintech company that provides next generation blockchain-powered technologies to enable a migration to a new global financial paradigm. As part of the acquisition, the
23
Company acquired trade names, customer relationships, and developed technology, which will be amortized over a period of
seven years
,
10
years, and
five years
, respectively (see Note 3).
Soin Intangible Assets
Effective as of December 28, 2022, the Company acquired Soin Therapeutics LLC, a Delaware limited liability company (“STLLC”), and its product, a patent-pending, novel formulation of low-dose naltrexone. The assets acquired by the Company consist of 1)
three
pending patents related to the methods of using low-dose Naltrexone to treat chronic pain, 2) final formula for Naltrexone, and 3) orphan drug designation as approved by the FDA. The Company reviewed the assets acquired and determined that no in-process research and development costs were acquired as part of the transaction, and, thus, all assets acquired represent intellectual property and should be capitalized. The Company will amortize the intangible assets ratably over a
10
-year period.
Note 10:
Goodwill
The following table details the Company's goodwill as of June 28, 2025 and December 28, 2024 (in $000's):
| Fintech | Biotech | Corporate and Other | Total | ||||||||||||||||||||
| December 28, 2024 |
|
|
|
|
|||||||||||||||||||
| Mswipe acquisition |
|
|
|
|
|||||||||||||||||||
| Mswipe tax adjustment |
|
|
|
|
|||||||||||||||||||
| June 28, 2025 | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
The Company accounts for purchased goodwill and intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other. Goodwill recognized during the 26 weeks ended June 28, 2025 was approximately $
6.4
million, and was due to the acquisition of Mswipe (see Note 3).
Note 11:
Accrued Liabilities
Accrued liabilities as of June 28, 2025 and December 28, 2024 consist of the following (in $000’s):
|
June 28,
2025 |
December 28,
2024 |
||||||||||
| Compensation and benefits | $ |
|
$ |
|
|||||||
| Accrued guarantees |
|
|
|||||||||
| Accrued taxes |
|
|
|||||||||
| Accrued interest |
|
|
|||||||||
| Accrued Qoden payments |
|
|
|||||||||
| Accrued litigation/legal |
|
|
|||||||||
| Other |
|
|
|||||||||
| Total accrued expenses | $ |
|
$ |
|
|||||||
24
Note 12:
Debentures
Debentures outstanding as of
June 28, 2025 and December 28, 2024 consisted for the following (in $000’s):
| June 28, 2025 | December 28, 2024 | ||||||||||
|
Interest rate of
|
$ |
|
$ |
|
|||||||
| Total debentures | $ |
|
$ |
|
|||||||
ALT5 Subsidiary issued
seven
debentures over a period from October 2018 through September 2019. The debentures bear interest at
12
% per annum and mature as of June 30, 2025.
Note 13:
Debt
Long-term debt as of June 28, 2025 and December 28, 2024 consisted of the following (in $000’s):
|
June 28,
2025 |
December 28,
2024 |
||||||||||
| Legacy subsidiary fixed deposits | $ |
|
$ |
|
|||||||
| Legacy subsidiary loan |
|
|
|||||||||
| Unaffiliated third-party |
|
|
|||||||||
| Seller notes |
|
|
|||||||||
| Other |
|
|
|||||||||
| Total notes payable, related parties |
|
|
|||||||||
| Less current portion |
(
|
|
|||||||||
| Total long-term notes payable, related parties | $ |
|
$ |
|
|||||||
Legacy Subsidiary Fixed Deposits
ALT5 Subsidiary entered into several Corporate Fixed Deposit Agreements with otherwise unaffiliated third-parties, pursuant to which the Company became obligated for an aggregate of $
5.5
million, as set forth in the respective agreements. Each obligation bears interest at a rate of
13
% or
15
% per annum, and has a maturity date range of April 2026 to March 2027. Several of these unaffiliated third-parties agreed to convert their respective investments into Future Equity Agreements for shares of the Company’s subsidiary, Alyea Therapeutic and, consequently, approximately $
125,000
of these deposits were reclassified as non-controlling interest. As of June 28, 2025 and December 28, 2024, the outstanding aggregate obligations totaled approximately $
7.9
million and $
4.2
million, respectively.
Legacy Subsidiary Loan
On August 10, 2023, ALT5 Subsidiary entered into an extension agreement for a Bitcoin promissory note with an otherwise unaffiliated third-party. The Bitcoin promissory note is denominated in Bitcoin and, thus, is adjusted to its fair value each period. Pursuant to the terms of an extension agreement, the maturity date is August 2025. The promissory note bears interest at
15
% per annum. As of June 28, 2025 and December 28, 2024, the outstanding balance of the note was approximately $
4.3
million
and $
3.8
million, respectively.
Unaffiliated Third-Party Loans
ICG Note
On February 7, 2024, the Company amended its outstanding related party promissory obligations (the “ICG Note”) in favor of Isaac Capital Group LLC (“ICG”) to add a convertibility provision. In accordance with Nasdaq Rules, the per-share conversion price was set at $
0.61
, subject to standard adjustments for (i) stock dividends and splits, (ii) subsequent rights offerings, and (iii) pro rata distributions. The Company’s board of directors provided its approvals of the amendments on February 7, 2024. On March 6, 2024, ICG entered into a Note Purchase Agreement with an otherwise unaffiliated third party, under which the third party acquired the ICG Note. The terms and conditions of the ICG Note were not modified in connection with its acquisition by the third party. The principal amount of the ICG Note on the date of acquisition was approximately $
1.2
million. As of June 28, 2025, the third party had converted $
872,000
of the Company’s obligations
25
under the ICG Note into
1.4
million shares of the Company’s common stock. As of June 28, 2025 and December 28, 2024, the amount outstanding on the ICG Note was approximately $
0.4
million and $
0.7
million, respectively.
Live Note
On February 7, 2024, the Company amended its outstanding related party promissory obligations (the “Live Note”) in favor of Live Ventures Incorporated (“Live”) to add a convertibility provision. In accordance with Nasdaq Rules, the per-share conversion price for each obligation, as amended, was set at $
0.61
, subject to standard adjustments for (i) stock dividends and splits, (ii) subsequent rights offerings, and (iii) pro rata distributions. The Company’s board of directors provided its final approvals of the amendments on February 7, 2024. On March 6, 2024, Live entered into a Note Purchase Agreement with another otherwise unaffiliated third party, under which the third party acquired the Live Note. The terms and conditions of the acquired Live Note were not modified in connection with its acquisition by the third party. The principal amount of the Live Note on the date of acquisition was approximately $
1.0
million. As of June 28, 2025, the third party had converted $
335,500
of the Company’s obligations under the Live Note into
550,000
shares of the Company’s common stock. As of June 28, 2025 and December 28, 2024, the amount outstanding on the Live Note was approximately $
0.8
million and $
0.8
million.
Big/Small Debentures
On August 20, 2024, the Company entered into three Purchase Agreements with
three
otherwise unaffiliated third-party investors (the “Investors”), pursuant to which (1) one Investor agreed to purchase a unit (the “Unit”), consisting of (i) a non-convertible debenture in the principal amount of up to approximately $
1.8
million (the “Big Debenture”), and (ii) a warrant (the “Big Warrant”) for the purchase of up to
400,000
shares of the Company’s Common Stock and (2) the two other Investors each agreed to purchase a Unit, consisting of (i) a non-convertible debenture in the principal amount of up to $
404,454
(the “Small Debenture”, and, together with the Big Debenture, the “Debentures”) and (ii) a warrant (the “Small Warrant”, and, together with the Big Warrant, the “Warrants”) for the purchase of up
90,909
shares of Common Stock.
The Debentures are unsecured and subordinated to any existing or future debt.
The Debentures bear interest at a rate of (i)
1
% per month from and after August 20, 2024 (“Original Issue Date”) through and including October 31, 2024, (ii)
3
% per month from and after November 1, 2024 through and including January 29, 2025, and (iii)
4
% per month from and after January 30, 2025 through and including the date of repayment.
The Big Debenture was issued with an original issue discount (an “OID”) initially of $
171,000
, which OID can be expanded with up to
two
potential additions, the first in the amount of $
171,000
and, thereafter, in the amount of $
342,000
, which OIDs will increase the principal amount owing on the Big Debenture.
With the original OID, the initial principal amount owing under the Big Debenture is approximately $
1.3
million; if, expanded, the principal amount would increase to approximately $
1.4
million and, thereafter, potentially to approximately $
1.8
million. The first potential increase in the Big Debenture OID would occur if the initial principal amount and interest accrued thereon is not paid in full on or before October 31, 2024. The second potential increase in the OID would occur if the initial principal amount (including the first potential increase in the OID) and interest accrued thereon is not paid in full on or before January 29, 2025.
The Small Debentures were issued with an OID initially of $
38,863
, which OID can be expanded with up to
two
potential additions, the first in the amount of $
38,863
and, thereafter, in the amount of $
77,728
, which OIDs will increase the principal amount owing on the Small Debentures.
With the original OID, the initial principal amount owing under a Small Debenture is $
288,864
; if, expanded, the principal amount would increase to $
327,726
and, thereafter, potentially to $
404,454
.
The first potential increase in the Small Debenture OID would occur if the initial principal amount and interest accrued thereon is not paid in full on or before October 31, 2024.
The second potential increase in the OID would occur if the initial principal amount (including the first potential increase in the OID) and interest accrued thereon is not paid in full on or before January 29, 2025.
As of November 1, 2024, the first of the
two
additional OIDs was effective.
The final maturity date for each of the Debentures is April 28, 2025.
The Big Warrant is exercisable, at an exercise price of $
1.71
per share, as follows: (i)
100,000
shares of Common Stock as of Original Issue Date, (ii) contingently for an additional
100,000
shares of Common Stock as of October 31, 2024, if, as of such date, the Company has not repaid in full its obligations under the Big Debenture, and (iii) contingently for an additional
200,000
shares of Common Stock as of January 29, 2025, if, as of such date, the Company has not repaid in full its obligations under the Big Debenture. The Company and the holder of the Big Warrant reached an agreement, pursuant
26
to which the term of the final tranche of the Big Warrant was extended to August 20, 2027, the number of underlying shares was reduced to
192,982
shares of Common Stock, and the exercise price of $
1.71
per share was unchanged.
The Small Warrant is exercisable, at an exercise price of $
1.71
per share, as follows: (i)
22,727
shares of Common Stock as of Original Issue Date, (ii) contingently for an additional
22,727
shares of Common Stock as of October 31, 2024, if, as of such date, the Company has not repaid in full its obligations under the Small Debenture, and (iii)
45,455
shares of Common Stock as of January 29, 2025, if, as of such date, the Company has not repaid in full its obligations under the Small Debenture.
As of November 1, 2024, the contingent second tranche of the Warrants vested.
Except as disclosed with respect to the final tranche of the Big Warrant, each Investor is required to exercise the initial tranche of each Warrant within
15
days of the Original Issue Date. Upon the vesting of each contingent tranche of a Warrant vest, each Investor shall exercise such vested, contingent tranche within
15
days of the vesting of such contingent tranche. If the Company consummates any equity or debt financing before satisfying in full its obligations under the Debentures, then
50
% of every net dollar received by the Company from any such financing transaction shall be paid by the Company to the holders of the Debentures, on a pro rata basis, as a mandatory pre-payment thereof. In the event the Company has repaid all sums owing under a Debenture to the Investor, except for an amount equal to any non-conditional OID, the Company has the right, not the obligation, to exercise the vested portion of the Warrant held by the Debenture holder through a set-off of any or all such unpaid OID, on a dollar-for-dollar basis. The Warrants also feature a “cashless” exercise provision. In lieu of making the cash payment otherwise contemplated to be made to the Company upon exercise of a Warrant in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of shares of Common Stock determined according to a formula set forth in the Warrant.
During the quarter ended June 28, 2025, one of the two non-affiliated Investors exercised the remainder of the Small Warrant for a total of
45,455
shares (see Note 14). During the fourth quarter of the year ended December 28, 2024, the non-affiliated Investor exercised the Big Warrant for a total of
200,000
shares of the Company’s common stock, and the other two non-affiliated Investors exercised the Small Warrant for a total of
90,908
shares. Additionally, during the fourth quarter of the year ended December 28, 2024, these unaffiliated third-parties agreed to convert a portion their respective investment into Future Equity Agreements of the Company’s subsidiary, Alyea Therapeutics and, consequently, approximately $
1.3
million was reclassified as non-controlling interest. During the 13 weeks ended June 28, 2025, the Company paid approximately $
0.2
million, in principal and accrued interest, to one of the two non-affiliated Investors in settlement of its debt. As of June 28, 2025 and December 28, 2024, the outstanding balance due on the debentures was approximately $
0.3
million and $
0.5
million, respectively, consisting of principal and accrued interest.
Corporate Fixed Deposit Agreement
On September 19, 2024, ALT5 Subsidiary and an investor entered into a
12-month
Corporate Fixed Deposit Agreement, pursuant to which ALT5 Subsidiary borrowed $
1.5
million at an interest rate of
12
% per annum, payable monthly, calculated on the then-unpaid principal amount.
Upon maturity, ALT5 Subsidiary is obligated to repay the principal amount in full and any accrued and unpaid interest.
The principal may be repaid in full, but not in part, with a pre-payment penalty equivalent to three month’s of interest. As of June 28, 2025 and December 28, 2024, the outstanding balance was approximately $
1.6
million and $
1.5
million, respectively, consisting of principal and accrued interest.
Personal Fixed Deposit Agreement
On February 1, 2025, ALT5 Subsidiary and an investor entered into a
24-month
Personal Fixed Deposit Agreement, pursuant to which ALT5 Subsidiary borrowed $
0.5
million at an interest rate of
13
% per annum, payable monthly, calculated on the then-unpaid principal amount.
Upon maturity, ALT5 Subsidiary is obligated to repay the principal amount in full and any accrued and unpaid interest.
The principal may be repaid in full, but not in part, with a pre-payment penalty equivalent to three month’s of interest. As of June 28, 2025, the outstanding balance was approximately $
0.5
million.
Seller Notes
Effective on May 9, 2025, the Company and our indirect, wholly-owned second tier Canadian subsidiary entered into an agreement to purchase all of the outstanding capital stock of an entity that, through its subsidiaries, offers multi-currency, fiat- and crypto-enabled payment card services (see Note 3). In connection with this transaction, the Company entered into promissory notes with the three sellers of Mswipe in the amount of $
5.1
million, $
676,000
, and $
376,000
, respectively. The
27
fair values assigned to the promissory notes, as calculated by a third-party firm, was approximately $
4.7
million, $
621,000
, and $
346,000
, respectively. Each note bears interest at
3.99
% per annum, and matures on June 29, 2026. As of June 28, 2025, the outstanding balance on the three notes was $
4.8
million, $
634,000
, and $
353,000
, respectively.
Note 14:
Related Party Debt
Long-term debt payable to related parties as of June 28, 2025 and December 28, 2024 consisted of the following (in $000’s):
|
June 28,
2025 |
December 28,
2024 |
||||||||||
|
Isaac Capital Group,
|
$ |
|
$ |
|
|||||||
|
Live Ventures Incorporated,
|
|
|
|||||||||
| Isaac Capital Group short-term demand advance |
|
|
|||||||||
| Novalk Apps SAA, LLP short-term demand advance |
|
|
|||||||||
| Total notes payable, related parties |
|
|
|||||||||
| Less current portion |
(
|
(
|
|||||||||
| Total long-term notes payable, related parties | $ |
|
$ |
|
|||||||
Total future maturities of long-term debt to related parties is as follows (in $000’s):
| Twelve months ending March 29, | |||||
| 2026 | $ |
|
|||
| Total future maturities of long-term debt, related parties | $ |
|
|||
Isaac Capital Group LLC
On February 7, 2024, the Company amended its outstanding related party promissory obligations (the “ICG Note”) in favor of ICG to add a convertibility provision. In accordance with Nasdaq Rules, the per-share conversion price was set at $
0.61
, subject to standard adjustments for (i) stock dividends and splits, (ii) subsequent rights offerings, and (iii) pro rata distributions. The Company’s board of directors provided its approvals of the amendments on February 7, 2024. On March 6, 2024, ICG entered into a Note Purchase Agreement with an otherwise unaffiliated third party, under which the third party acquired the ICG Note. The terms and conditions of the ICG Note were not modified in connection with its acquisition by the third party. The principal amount of the ICG Note on the date of acquisition was approximately $
1.2
million. As of June 28, 2025, the third party had converted approximately $
307,000
of the Company’s obligation under the ICG Note into
502,852
shares of the Company’s common stock. As of June 28, 2025 and December 28, 2024, the amount outstanding on the ICG Note was approximately $
30,000
and $
0.3
million, respectively (see Note 20).
On April 18, 2024, ICG made a short-term demand advance to the Company in the amount of $
0.1
million. The advance bears interest at a rate of
10
% per annum until repaid. As of June 28, 2025 and December 28, 2024, the principal amount outstanding was $
23,000
and $
48,000
, respectively (see Note 20).
Live Ventures Incorporated
On February 7, 2024, the Company amended its outstanding related party promissory obligations (the “Live Note”) in favor of Live Ventures to add a convertibility provision. In accordance with Nasdaq Rules, the per-share conversion price for each obligation, as amended, was set at $
0.61
, subject to standard adjustments for (i) stock dividends and splits, (ii) subsequent rights offerings, and (iii) pro rata distributions. The Company’s board of directors provided its final approvals of the amendments on February 7, 2024. On March 6, 2024, Live Ventures entered into a Note Purchase Agreement with another otherwise unaffiliated third party, under which the third party acquired the Live Note. The terms and conditions of the acquired Live Note were not modified in connection with its acquisition by the third party. The principal amount of the Live Note on the date of acquisition was approximately $
1.0
million. As of June 28, 2025 and December 28, 2024, the amount outstanding on the Live Note was approximately $
0.3
million and $
0.3
million, respectively (see Note 20).
Novalk Apps SAA, LLP
On May 28, 2024 and June 3, 2024, Novalk Apps SAA, LLP (“Novalk”) made short-term demand advances in the amount of $
120,000
and $
100,000
, respectively, to the Company. The advances bears interest at a rate of
10
% per annum until
28
repaid. As of June 28, 2025 and December 28, 2024, the principal amount outstanding was approximately $
0.1
million (see Note 20).
Note 15:
Commitments and Contingencies
Litigation
SEC Complaint
On August 2, 2021, the U.S. Securities and Exchange Commission (“SEC”) filed a civil complaint (the “SEC Complaint”) in the United States District Court for the District of Nevada naming the Company and
one
of its executive officers, Virland Johnson, the Company's Chief Financial Officer, as defendants (collectively, the “Defendants”). Pursuant to an agreed-upon Order of the Court, on May 28, 2024, the Company settled its litigation with the SEC. The Settlement Agreement provided, in pertinent part: “Without admitting or denying the allegations of the complaint (except as provided herein in paragraph 12 and except as to personal and subject matter jurisdiction, which [the Company] admits), [the Company] hereby consents to the entry of the final Judgment in the form attached hereto (the “Final Judgment”) and incorporated by reference herein, which, among other things: “(a) permanently restrains and enjoins [the Company] from violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder [15 U.S.C. § 78j(b) and 17 C.F.R. §§ 240.10b-5]; and (c)[sic] orders [the Company] to pay a civil penalty in the amount of $
250,000
under Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)).” The SEC has agreed to accept
four
quarterly payments from the Company, each in the amount of $
62,500
. The Settlement Agreement is attached to the Order as Exhibit 1, both of which documents may be viewed at https://ecf.nvd.uscourts.gov/doc1/115110470966.
The SEC Complaint's remaining allegations relate to financial, disclosure and reporting violations against the executive officer under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5. The SEC Complaint also alleges various claims against the executive officer under Sections 13(a), 13(b)(2)(A), 13(b)(2)(B) and 13(b)(5) of the Exchange Act and Rules 12b-20, 13a-1, 13a-13, 13a-14, 13b2-1, and 13b2-2. The SEC continues to seek a permanent injunction, civil penalties, and an officer-and-director bar against the executive officer. The foregoing is only a general summary of the SEC Complaint, which may be accessed on the SEC’s website at https://www.sec.gov/litigation/litreleases/2021/lr25155.htm.
Sieggreen
In a matter pending in the United States District Court for the District Of Nevada, Case No. 2:21-cv-01517-CDS-EJY, styled as
Sieggreen, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. Live Ventures Incorporated, Jon Isaac, and Virland A. Johnson, Defendants
, the Company was added as a defendant on March 6, 2023, and was served on March 23, 2023. Plaintiff has alleged causes of action against the Company for (i) violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and (ii) violation of Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and 10b-5(c) promulgated thereunder. In June 2023 the Company filed a Motion to Dismiss, which the Court granted with leave for Plaintiffs to file a second amended complaint. Plaintiffs filed their Second Amended Complaint on October 31 2024. On December 16, 2024, the Company filed a Motion to Dismiss, regarding which, as of the date of these financial statements, the Court has not ruled. The Company strongly disputes and denies all of the allegations contained therein and will continue to defend itself vigorously against the claims.
Main/270
The Company is a defendant in an action filed on April 11, 2022, in the U.S. District Court Southern District of Ohio, Eastern Division, styled,
Trustees Main/270, LLC, Plaintiff, vs ApplianceSmart, Inc. and JANONE, Inc., Defendant
, Case no.: 2:22-cv-01938-ALM-EPD. The Company was a guarantor of the lease between the Plaintiff and ApplianceSmart, Inc. Plaintiff alleged a cause of action against the Company in respect of the guaranty and seeks approximately $
90,000
therefor. Plaintiff also seeks approximately $
1,420,000
against ApplianceSmart and the Company on a joint and several basis. Trial has already been conducted in this case. ALT5 Sigma is awaiting the judge’s decision.The Company does not believe that it is obligated to Plaintiff in that amount and the parties continue to negotiate a potential settlement.
Gulf Coast Bank and Trust vs. ALT5 Sigma Corporation, et al.
Alt5 Sigma posted a $
900,000
cash bond with the Court that is earning interest. Plaintiff seeks the payment of outstanding amounts related to a loan guarantee that existed for a prior subsidiary, ARCA Recycling Inc., in the amount of approximately $
1.6
million, inclusive of principal, interest, and attorneys’ fees to date. ALT5 Sigma believes that Gulf Coast did not collect accounts receivable, inventory, and equipment of the prior subsidiary, as debtor, in a commercially
29
reasonable manner, which resulted in substantial loss of collateral value. Experts were designated by July 31, 2025, and their depositions are being scheduled for the month of August. Both sides have already taken non-expert depositions. Trial is not yet set, but is expected sometime in 2026. Venue is Hennepin County, Minnesota.
First Capital Consulting, Inc. DBA Trusaic vs. ALT5 Sigma Corporation
Trial is scheduled to start on June 29, 2026. Plaintiff is seeking $
97,696.42
, plus costs and interest, against ALT5 Sigma for unpaid obligations of entities that no longer exist or do not have any assets,
i.e.
, ARCA Recycling Inc. and Customer Connexx LLC. Plaintiff alleges that ALT5 Sigma, as the parent company at the time, should be responsible for the fees. ALT5 Sigma believes that it is not responsible for the fees, as the unpaid services were provided for the two subsidiaries and not for the corporate parent. Venue is Los Angeles County, California.
Other Commitments
On December 30, 2017, the Company disposed of its retail appliance segment and sold ApplianceSmart to Live Ventures, a related party. In connection with that sale, as of January 1, 2022, the Company accrued an aggregate amount of future real property lease payments of approximately $
767,000
which represented amounts guaranteed or which may have been owed under certain lease agreements to
three
third party landlords in which the Company either remained the counterparty, was a guarantor, or had agreed to remain contractually liable under the lease (“ApplianceSmart Leases”). A final decree was issued by the court on February 28, 2022, upon the full satisfaction of the Plan, at which time ApplianceSmart emerged from Chapter 11. During the year ended December 28, 2024, the Company reversed approximately $
637,000
of the accrual, as the Company is no longer liable for
two
of these guarantees upon ApplianceSmart's emergence from bankruptcy. As of December 28, 2024, a balance of approximately $
130,000
remains as an accrued liability due to an ongoing dispute concerning one of the leases. The Company and Live Ventures have agreed to divide in half between them any ultimate balance owing thereunder and any attorneys’ fees expended in relation thereto.
The Company is party from time to time to other ordinary course disputes that we do not believe to be material to our financial condition as of June 28, 2025.
Note 16:
Stockholders’ Equity
Common Stock
: Our Articles of Incorporation authorize
200,000,000
shares of common stock that may be issued from time to time having such rights, powers, preferences and designations as the Board of Directors may determine. During the 13 weeks ended June 28, 2025 and June 29, 2024,
no
shares of common stock were issued in lieu of professional services.
During second quarter ended June 28, 2025, the Company issued
100,000
shares of its common stock to
one
individual under the Company’s 2023 Equity Incentive Plan. The aggregate value of the shares at issuance was approximately $
605,000
.
During second quarter ended June 28, 2025, the Company issued
17,511
shares of its common stock to a non-affiliated third-party in exchange for brokerage services rendered.
During the second quarter ended June 28, 2025, the Company issued an aggregate of
700,000
restricted stock units to Tony Isaac, the Company’s President.
350,000
of the restricted stock units were issued from the Company
’s
2024 Plan and
350,000
were issued from the Company’s 2023 Plan. The aggregate value of the shares at issuance was approximately $
1.4
million.
During second quarter ended June 28, 2025, pursuant to the terms and conditions of a related party promissory note, the Company converted approximately $
323,000
of obligations into
529,161
shares of the Company's common stock (see Note 14).
During second quarter ended June 28, 2025, pursuant to the terms and conditions of a related party promissory note, the Company converted approximately $
306,000
of obligations into
502,852
shares of the Company's common stock (see Note 14).
On May 15, 2025, pursuant to the terms and conditions of a promissory note, the Company converted approximately $
91,500
of obligations into
150,000
shares of the Company's common stock (see Note 13).
On May 9, 2025, the Company acquired Mswipe. As consideration under the acquisition, the Company issued
1,000,000
shares of its common stock to the sellers of Mswipe (see Note 3).
30
On May 2, 2025, the Company entered into a licensing agreement with a non-affiliated third-party, pursuant to which the third-party will provide software licensing and support to the Company. In connection with the agreement, the Company issued to the third-party
300,000
shares of its common stock.
During the first quarter ended March 29, 2025, the Company issued
45,455
shares of its common stock related to the exercise of warrants under the Small Debenture (see Note 13).
On May 4, 2024, the Company entered into an Asset Purchase Agreement for the purchase of specified assets of an unaffiliated third-party. In connection with this transaction, the Company tendered
5,000
shares of the Company's Series V Convertible Preferred Stock. The conversion ratio of the Series V Convertible Preferred Stock is 1:120, meaning every one share of Series V Convertible Preferred Stock, if and when converted into shares of Common Stock shall convert into 120 shares of Common Stock. On March 12, 2025, the unaffiliated third-party exercised all tendered shares of Series V Convertible Preferred Stock into
600,000
shares of the Company’s common stock.
On January 15, 2025, the Company entered into a
six-month
consulting agreement with a non-affiliated third-party, pursuant to which the third-party will provide a variety of corporate advisory services related to investment banking matters to the Company. In connection with the agreement, on January 15, 2025
,
the Company issued to the third-party
15,499
shares of its common stock.
As of June 28, 2025, and December 28, 2024, there were
20,455,923
and
15,417,693
shares, respectively, of common stock issued and outstanding.
Equity Offerings
: The Company’s 2024 Plan, which was adopted by the Board in November 2024 and approved by the stockholders at the 2024 annual meeting of stockholders, replaces the 2023 Plan, which replaced the 2016 Plan, which replaced the 2011 Plan. Under the 2024 Plan, the maximum aggregate number of shares, which may be subject to or delivered under Awards granted under the Plan is
2,800,000
shares. Awards may be in the form of a Stock Award, Option, Stock Appreciation Right, Stock Unit, or Other Stock-based Award granted in accordance with the terms of the respective Plan. During the 13 weeks ended June 28, 2025, there were
no
grants under the 2024 Plan.
The Company’s 2023 Plan, which was adopted by the Board in August 2023 and approved by the stockholders at the 2023 Annual Meeting of Stockholders, replaces the 2016 Plan, which replaced the 2011 Plan. Under the 2023 Plan, the maximum aggregate number of shares, which may be subject to or delivered under Awards granted under the Plan is two million (
2,000,000
) shares. Awards may be in the form of a Stock Award, Option, Stock Appreciation Right, Stock Unit, or Other Stock-based Award granted in accordance with the terms of the respective Plan. During the 13 weeks ended June 28, 2025 and June 29, 2024, the Company recognized $
0
and $
345,000
in share-based compensation expense related to the
908,852
RSU
’
s that were awarded and immediately vested.
The Company’s 2016 Plan authorizes the granting of awards in any of the following forms: (i) incentive stock options, (ii) nonqualified stock options, (iii) restricted stock awards, and (iv) restricted stock units, and expires on the earlier of October 28, 2026, or the date that all shares reserved under the 2016 Plan are issued or no longer available. On November 4, 2020, the Company amended the 2016 Plan to increase the issuance of common shares from
400,000
to
800,000
. The vesting period is determined by the Board of Directors at the time of the stock option grant. As of June 28, 2025 and December 28, 2024,
100,000
options were outstanding under the 2016 Plan.
The Company's 2011 Plan authorizes the granting of awards in any of the following forms: (i) stock options, (ii) stock appreciation rights, and (iii) other share-based awards, including but not limited to, restricted stock, restricted stock units or performance shares, and expired on the earlier of May 12, 2021, or the date that all shares reserved under the 2011 Plan are issued or no longer available. As of June 28, 2025 and December 28, 2024,
8,000
were outstanding under the 2011 Plan.
No
additional awards will be granted under the 2011 Plan.
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. There were
no
stock options granted during the 13 weeks ended June 28, 2025.
31
Additional information relating to all outstanding stock options is as follows:
|
Options
Outstanding |
Weighted
Average Exercise Price |
Aggregate
Intrinsic Value |
Weighted
Average Remaining Contractual Life |
||||||||||||||||||||
| Outstanding at December 28, 2024 |
|
$ |
|
$ |
|
|
|||||||||||||||||
| Outstanding at March 29, 2025 |
|
$ |
|
$ |
|
|
|||||||||||||||||
| Cancelled/expired |
(
|
$ |
|
||||||||||||||||||||
| Outstanding at June 28, 2025 |
|
$ |
|
$ |
|
|
|||||||||||||||||
| Exercisable at June 28, 2025 |
|
$ |
|
$ |
|
|
|||||||||||||||||
The Company recognized $
0
and $
1.2
million in share-based compensation expense related to restricted stock units for the 13 weeks ended June 28, 2025 and June 29, 2024, respectively, and $
0
and $
1.5
million for the 26 weeks ended June 28, 2025 and June 29, 2024, respectively.
As of June 28, 2025, the Company has the Company had
no
unrecognized share-based compensation expense associated with equity awards.
Series A-1 Convertible Preferred Stock
Shares of Series A-1 Preferred Stock are convertible into the Company’s common shares at a ratio of
20
:1.
44,250
shares were converted during the 13 weeks ended June 28, 2025. As of June 28, 2025 and December 28, 2024, there were
0
and
23,480
shares of Series A-1 Convertible Preferred Stock outstanding, respectively.
Series I Convertible Preferred Stock
Shares of Series I Preferred Stock are convertible into the Company’s common shares at a ratio of
100
:1.
No
shares were converted during the 13 weeks ended June 28, 2025. As of June 28, 2025 and December 28, 2024, there were
17,000
shares of Series I Convertible Preferred Stock outstanding.
Series Q Convertible Preferred Stock
Shares of Series Q Preferred Stock are convertible into the Company’s common shares at a ratio of
1
:1.
192,752
shares were converted during the 13 weeks ended June 28, 2025. As of June 28, 2025 and December 28, 2024, there were
732,460
shares of Series Q Convertible Preferred Stock outstanding.
Series S Preferred Stock
On December 28, 2022 the Company acquired Soin Therapeutics by way of merger. In connection with this transaction, with a potential value of up to $
30
million, the Company tendered
100,000
shares of the Company's Series S Convertible Preferred Stock. Shares of Series S Convertible Preferred Stock are convertible into the Company’s common shares at a ratio of
1
:1.
No
shares were converted during the 13 weeks ended June 28, 2025. As of June 28, 2025 and December 28, 2024, there were
100,000
shares of Series S Convertible Preferred Stock outstanding.
Series V Convertible Preferred Stock
Shares of Series V Preferred Stock are convertible into the Company’s common shares at a ratio of
120
:1. During the 13 weeks ended June 28, 2025, all outstanding shares of Series V Preferred Stock were converted into
600,000
shares of the Company’s common stock (see above). As of June 28, 2025 and December 28, 2024, there were
0
and
5,000
shares of Series V Convertible Preferred Stock outstanding, respectively.
Note 17:
Mezzanine Equity
During the year ended December 28, 2024, the Company reclassified approximately $
2.7
million from mezzanine equity to current liabilities, and approximately $
8.0
million from mezzanine equity to permanent equity. As of June 28, 2025, the outstanding balance in mezzanine equity was approximately $
3.9
million.
32
Note 18:
Earnings Per Share
Net income (loss) per share is calculated using the weighted average number of shares of common stock outstanding during the applicable period. Basic weighted average common shares outstanding do not include shares of restricted stock that have not yet vested, although such shares are included as outstanding shares in the Company’s Consolidated Balance Sheet. Diluted net income (loss) per share is computed using the weighted average number of common shares outstanding and if dilutive, potential common shares outstanding during the period. Potential common shares consist of the additional common shares issuable in respect of restricted share awards, stock options, warrants, and convertible preferred stock.
The following table presents the computation of basic and diluted net income (loss) per share (in $000’s, except share and per–share data):
| For the Thirteen Weeks Ended | For the Twenty-Six Weeks Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Continuing Operations | |||||||||||||||||||||||
| Basic and diluted | |||||||||||||||||||||||
| Net (loss) income from continuing operations | $ |
(
|
$ |
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Weighted average common shares outstanding |
|
|
|
|
|||||||||||||||||||
| Basic and diluted (loss) income per share from continuing operations | $ |
(
|
$ |
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Diluted | |||||||||||||||||||||||
| Net (loss) income from continuing operations | $ |
(
|
$ |
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Weighted average common shares outstanding |
|
|
|
|
|||||||||||||||||||
| Diluted (loss) income per share from continuing operations | $ |
(
|
$ |
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Discontinued Operations | |||||||||||||||||||||||
| Basic and diluted | |||||||||||||||||||||||
| Net loss from discontinued operations | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Weighted average common shares outstanding |
|
|
|
|
|||||||||||||||||||
| Basic and diluted loss per share from discontinued operations | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Diluted | |||||||||||||||||||||||
| Net loss from discontinued operations | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Weighted average common shares outstanding |
|
|
|
|
|||||||||||||||||||
| Diluted loss per share from discontinued operations | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Total | |||||||||||||||||||||||
| Basic and diluted | |||||||||||||||||||||||
| Net (loss) income | $ |
(
|
$ |
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Weighted average common shares outstanding |
|
|
|
|
|||||||||||||||||||
| Basic and diluted (loss) income per share | $ |
(
|
$ |
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Diluted | |||||||||||||||||||||||
| Net (loss) income | $ |
(
|
$ |
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Weighted average common shares outstanding |
|
|
|
|
|||||||||||||||||||
| Diluted (loss) income per share | $ |
(
|
$ |
|
$ |
(
|
$ |
(
|
|||||||||||||||
Potentially dilutive securities totaling approximately
9.2
million and
0.1
million were excluded from the calculation of diluted earnings per share for the 13 weeks ended June 28, 2025 and June 29, 2024, respectively, because the effects were anti-dilutive.
33
Note 19:
Income Taxes
The Company recorded an income tax benefit from continuing operations of approximately $
0.4
million and $
2.8
million for the 13 weeks ended June 28, 2025 and June 29, 2024, respectively, and an income tax expense from discontinued operations of $
3.0
million and an income tax benefit of $
0.1
million for the 13 weeks ended June 28, 2025 and June 29, 2024, respectively. The Company recorded an income tax benefit from continuing operations of approximately $
0.1
million and $
2.7
million for the 26 weeks ended June 28, 2025 and June 29, 2024, respectively, and an income tax expense from discontinued operations of $
3.0
million and an income tax benefit of $
0.2
million for the 26 weeks ended June 28, 2025 and June 29, 2024, respectively. The Company’s overall effective tax rate was
3.1
% and
65.3
% for the 26 weeks ended June 28, 2025 and June 29, 2024, respectively. The effective tax rates and related provisional tax amounts vary from the U.S. federal statutory rate primarily due to state taxes and certain non-deductible expenses.
Note 20:
Segment Information
The Company operates within targeted markets through
two
reportable segments for continuing operations: Fintech, Biotech, and Corporate and Other. On May 21, 2025, the Company disclosed that June 2, 2025 would be the record date for a transaction involving the Company’s formal separation of its Biotech segment, also known as Alyea (see Note 4). Consequently, the Biotech segment is being presented as discontinued operations for the 13 and 26 weeks ended June 28, 2025 and June 29, 2024.
34
The following tables present the Company's segment information for the 13 weeks ended June 28, 2025 and June 29, 2024 (in $000's):
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Fintech | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Corporate and other |
|
|
|
|
|||||||||||||||||||
| Discontinued operations |
|
|
|
|
|||||||||||||||||||
| Total Revenues | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Fintech | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Corporate and other |
|
|
|
|
|||||||||||||||||||
| Discontinued operations |
|
|
|
|
|||||||||||||||||||
| Total Gross profit | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Operating loss | |||||||||||||||||||||||
| Fintech | $ |
(
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||
| Corporate and other |
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Discontinued operations |
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Total Operating loss | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Fintech | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Corporate and other |
|
|
|
|
|||||||||||||||||||
| Discontinued operations |
|
|
|
|
|||||||||||||||||||
| Total Depreciation and amortization | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Fintech | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Corporate and other |
|
(
|
|
|
|||||||||||||||||||
| Discontinued operations |
|
|
|
|
|||||||||||||||||||
| Total Interest expense (income), net | $ |
|
$ |
(
|
$ |
|
$ |
|
|||||||||||||||
| Net loss before income taxes | |||||||||||||||||||||||
| Fintech | $ |
(
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||
| Corporate and other |
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Discontinued operations |
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Total Net income before income taxes | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
Note 21:
Related Parties
Shared Services
Tony Isaac, the Company’s President, is the father of Jon Isaac, President and Chief Executive Officer of Live Ventures and managing member of Isaac Capital Group LLC (“ICG”). Tony Isaac is a member of the Board of Directors of Live Ventures. The Company also shares certain executive, accounting and legal services with Live Ventures. The total services shared were approximately $
30,000
and $
34,000
for the 13 weeks ended June 28, 2025 and June 29, 2024, respectively, and $
58,000
and $
109,000
for the 26 weeks ended June 28, 2025 and June 29, 2024, respectively. ALT5 rents approximately
9,900
square feet of office space from Live Ventures in Las Vegas, Nevada.
Notes with Live Ventures and ICG
On February 7, 2024, the Company entered into a promissory notes with each of Live Ventures and ICG. The initial principal amount of each note is $
300,000
, with an interest rate of
10
% per annum. At the Company’s option, the obligation under each note is convertible after the six-month anniversary thereof at a per-share conversion price of $
0.61
,
35
subject to standard adjustments for (i) stock dividends and splits, (ii) subsequent rights offerings, and (iii) pro rata distributions. The Company’s board of directors approved the issuance of the two notes on February 7, 2024. As of June 28, 2025 and December 28, 2024, the balances outstanding on the Live Ventures and ICG promissory notes were approximately $
0.3
million and $
30,000
, respectively, consisting of principal and accrued interest (see Note 13).
Short-Term Advances
On April 18, 2024, ICG made a short-term demand advance to the Company in the amount of $
0.1
million. The advance bears interest at a rate of
10
% per annum until repaid. As of June 28, 2025 and December 28, 2024, the principal amount outstanding was $
23,000
and $
48,000
, respectively (see Note 13).
On May 28, 2024 and June 3, 2024, Novalk made short-term demand advances in the amount of $
120,000
and $
100,000
, respectively, to the Company. Juan Yunis, an employee of Live Ventures, is the managing member of Novalk. The advances bears interest at a rate of
10
% per annum until repaid. As of June 28, 2025 and December 28, 2024, the principal amount outstanding was $
0.1
million (see Note 13).
Note 22:
Subsequent event
The Company has evaluated subsequent events through the filing of this Form 10-Q, and determined that there have been no events that have occurred that would require adjustments to disclosures in its condensed consolidated financial statements other than as discussed below:
Registered Direct Offering
On or about August 12, 2025, the Company is contemplating the consummation transactions whereby the Company would enter into securities purchase agreements (the “Registered Offering Purchase Agreements”) with certain institutional investors pursuant to which the Company agreed to issue to the Purchasers (as defined therein), in a registered direct offering (the “Registered Offering”), an aggregate of
100,000,000
shares of the Company’s common stock, par value $
0.001
per share (“Common Stock”), at a purchase price of $
7.50
per share.
The Company intends to use up to $
10,000,000
of the net proceeds from the Registered Offering to settle existing litigation, pay existing debt, and fund the Company’s existing business operations, and the balance of the net proceeds will be used to fund the acquisition of $WLFI tokens from World Liberty Financial, Inc. (the “Lead Investor”), pursuant to a Token Purchase Agreement, and the establishment of the Company’s cryptocurrency treasury operations. The shares of Common Stock to be issued in the Registered Offering will be issued pursuant to a prospectus supplement, which was filed with the Securities and Exchange Commission on August 11, 2025, in connection with a takedown from the Company’s shelf registration statement on Form S-3, as amended, (File No. 333-289176), which was declared effective by the Securities and Exchange Commission on August 8, 2025.
Private Placement Offering
Also on or about August 12, 2025, the Company is contemplating the consummation of transactions resulting from a the Securities Purchase Agreement (the “Private Placement Purchase Agreement” and, together with the Registered Offering Purchase Agreements, the “Purchase Agreements”), with the Lead Investor, pursuant to which the Company would to receive $
750
million of $WLFI tokens and is scheduled to issue the Lead Investor, in a concurrent private placement (the “Private Placement” and together with the Registered Offering, the “Offerings”),
1,000,000
shares of Common Stock at a purchase price of $
7.50
per share (the “PIPE Shares”), and pre-funded warrants (the “PIPE Pre-Funded Warrants”) to purchase up to
99,000,000
shares of Common Stock at a purchase price of $
7.499
per PIPE Pre-Funded Warrant (the “PIPE Pre-Funded Warrant Shares”). Each of the PIPE Pre-Funded Warrants is contemplated to be exercisable for
one
share of Common Stock at an exercise price of $
0.001
per share. The PIPE Pre-Funded Warrants are not scheduled to be exercisable until the Company has obtained shareholder approval to: (i) allow the issuance of shares underlying the PIPE Pre-Funded Warrant in excess of
19.99
% of the shares of common stock outstanding immediately prior to the execution of the Purchase Agreement (the “Exchange Cap”); and (ii) filed an amendment to its Articles of Incorporation to increase the number of authorized shares of common stock (the “Amendment”). Following the effectiveness of the Amendment, the PIPE Pre-Funded Warrants may be exercised at any time until all of the PIPE Pre-Funded Warrants are exercised in full, subject to certain beneficial ownership limitations and the approval by the Company’s stockholders of the transaction such that the Nasdaq “Exchange Cap” will no longer be applicable.
It is contemplated that the Company will agree to hold an annual or special meeting of stockholders on or prior to September 30, 2025 and to file a Preliminary Proxy Statement with the Commission with the date that is twenty (20)
36
business days following the closing date for the purpose of obtaining the stockholder approval to the Exchange Cap and the Amendment (the “Stockholder Approval”), with the recommendation of the Company’s Board of Directors that the proposal to approve the Amendment. If the Company does not obtain Stockholder Approval at the first meeting, the Company is obligated to call a meeting every ninety (90) days thereafter to seek Stockholder Approval until the date on which Stockholder Approval is obtained.
Pursuant to the Private Placement Purchase Agreement, it is contemplated that the Lead Investor would be issued Common Stock Purchase Warrants (the “Lead Investor Warrants”) pursuant to which the Lead Investor would be issued warrants to purchase up to
10
% of the number of shares of common stock or pre-funded warrants sold in the offering, or
20
million shares of common stock. The Lead Investor Warrants would be exercisable (i)
8,000,000
shares of Common Stock at an exercise price of $
7.50
per share of Common Stock; (ii)
8,000,000
shares of Common Stock at an exercise price of $
8.25
per share of Common Stock; (iii)
8,000,000
shares of Common Stock at an exercise price of $
9.00
per share of Common Stock; and (iv)
8,000,000
shares of Common Stock at an exercise price of $
9.75
per share of Common Stock, subject to adjustment. The issuance of the shares of Common Stock underlying the exercise of the Lead Investor Warrants (the “Lead Warrant Shares”) are also subject to shareholder approval of the Exchange Cap and the Amendment.
The issuance and sale of the PIPE Shares, the PIPE Pre-Funded Warrants, the Lead Investor Warrants and the Lead Investor Shares, (the “PIPE Securities”) will not be, and are not, registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws. The PIPE Securities will be issued in reliance on the exemption from registration provided by Section 4(a)(2) under the Securities Act and/or Regulation D promulgated thereunder for transactions not involving a public offering. Pursuant to the terms of the Registration Rights Agreement (as defined herein), the Company is required to file a registration statement providing for the resale of the PIPE Securities within 15 days of the closing of the Private Placement.
The Registered Offering is expected to result in gross proceeds of $
750
million and the Private Placement is expected to result in the receipt of $
750
million of $WLFI tokens, in each case before deducting placement agent commissions and other offering expenses. The closing of the Offerings is contemplated to occur on or about August 12, 2025, subject to the satisfaction of customary closing conditions.
Pursuant to the Purchase Agreements, the Company will agree not to issue, enter into any agreement to issue, or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock equivalents, or file any registration statement or any amendment or supplement thereto, for a period of thirty (30) days after the initial registration statement has been declared effective, subject to certain customary exceptions, including the use of the Sales Agreement (as defined herein), without the consent of the Purchasers, the Lead Investor, and the Placement Agent.
Placement Agency Agreements
The Company entered into a Placement Agency Agreement with A.G.P./Alliance Global Partners (the “Placement Agent”), dated August 11, 2025, pursuant to which the Placement Agent will act as the exclusive placement agent for the Company in connection with the Registered Offering (the “RD Placement Agency Agreement). Pursuant to the RD Placement Agency Agreement, the Company agreed to pay the Placement Agent a cash fee of
3
% of the gross proceeds from the Registered Offering and to issue to the Placement Agent (or its designees) warrants to purchase that number of shares of Common Stock equal to
3
% of the securities sold in the Registered Offering, which will be exercisable beginning
180
days following the closing date, and have an initial exercise price per share of Common Stock of $
8.25
(the “Placement Agent Warrants”). In addition, the Company agreed to reimburse the Placement Agent for up to $
475,000
of its fees and expenses, and up to $
10,000
in non-accountable expenses, in connection with the Registered Offering.
The Company also entered into a Placement Agency Agreement with the Placement Agent, dated August 11, 2025, pursuant to which the Placement Agent will act as the exclusive placement agent for the Company in connection with the Private Placement (the “PIPE Placement Agency Agreement). Pursuant to the PIPE Placement Agency Agreement, the Company agreed to pay the Placement Agent (or its designees) a cash fee of (i) $
6,500,000
for all tokens paid for the securities sold in the Private Placement in excess of $
500,000,000
and (ii)
3
% of the gross proceeds of cash paid for the securities sold in the Private Placement Offering by the Placement Agent, and to issue to the Placement Agent, Placement Agent Warrants equal to
3
% of the securities sold in the Private Placement, which will be exercisable beginning
180
days following the closing date, and have an initial exercise price per share of Common Stock of $
8.25
. In addition, the Company agreed to reimburse the Placement Agent for up to $
475,000
of its fees and expenses, and up to $
10,000
in non-accountable expenses, in connection with the Private Placement.
37
The issuance of the Placement Agent Warrants and the shares of Common Stock underlying the Placement Agent Warrants (the “Placement Agent Warrant Shares”) will not be registered under the Securities Act or any state securities laws. The Placement Agent Warrant Shares will be issued in reliance on the exemption from registration provided by Section 4(a)(2) under the Securities Act and/or Regulation D promulgated thereunder for transactions not involving a public offering.
The Placement Agency Agreement contains customary representations, warranties, and agreements by the Company, customary conditions to closing, indemnification obligations of the Company, other obligations of the parties, and termination provisions.
Registration Rights Agreement
It is contemplated that on or about August 11, 2025, the Company and the Lead Investor will enter into a Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which the Company will agree to file a registration statement (the “Resale Registration Statement”), providing for the resale of the PIPE Securities within 15 days of the closing of the Private Placement, to have such registration statement declared effective with 30 days of the filing date (or 60 days, if the Securities and Exchange Commission conducts a full review) (the date of such effectiveness, the “Effective Date”), and to maintain the effectiveness of such registration statement.
Asset Management Agreement
Further, it is contemplated that, on or about August 11, 2025 (the “AMA Commencement Date”), the Company will enter into an Asset Management Agreement (the “Asset Management Agreement”) with Kraken (the “Asset Manager”), pursuant to which the Asset Manager will agree to provide discretionary investment management services with respect to the Company’s cryptocurrency treasury. The term of the Asset Management Agreement is for thirty (30) days renewable upon the mutual consent of the parties. The Asset Manager will receive a nominal fee as compensation for its services under the Asset Management Agreement.
Lock-Up Agreements
Pursuant to the Purchase Agreements, it is contemplated that the Company will not issue, enter into any agreement to issue, or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock equivalents, or file any registration statement or any amendment or supplement thereto, for a period of 30 days after the Effective Date, subject to certain customary exceptions, including the use of the Sales Agreement (as defined herein), without the consent of the Purchasers, the Lead Investor and the Placement Agent.
In addition, each of the Company’s directors and executive officers are contemplated to become subject to a lock-up agreement, which prohibits them from offering for sale, pledging, announcing the intention to sell, selling, contracting to sell, granting any option, right or warrant to purchase, or otherwise transferring or disposing of,
50
% of their shares of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock for a period of 90 days following the Effective Date and the remaining
50
% upon the later of ninety (90) days after the Effective Date or the effective date of the Stockholder Approval. It is contemplated that the lock-up agreements will not prohibit our directors and executive officers and the selling stockholder from transferring shares of our common stock for bona fide estate or tax planning purposes, subject to certain requirements, including that the transferee be subject to the same lock-up terms.
The ATM Agreement
On August 11, 2025, the Company entered into an ATM Sales Agreement (the “Sales Agreement”) with A.G.P./Alliance Global Partners, as sales agent (the “Agent”) to sell shares of its Common Stock, having an aggregate offering price of up to $
1,000,000,000
(the “ATM Shares”) from time to time, through an “at the market offering” (the “ATM Offering”) as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), registered pursuant to a prospectus supplement to the Company’s effective Registration Statement on Form S-3, as amended, (File No. 333-289176).
Pursuant to the Sales Agreement, the Agent will be entitled to compensation on the ATM Shares sold in the ATM Offering at a commission rate of
2.5
% of the gross sales price per Share on the first $
500
million of Shares sold and
2.0
% of the gross sales price per Share on all sales of Shares thereafter.
38
The information in included in this Note 22 shall not constitute an offer to sell or the solicitation of any offer to buy the Shares, nor shall there be any offer, solicitation or sale of the Shares in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such state.
39
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Dollars stated in thousands, except per–share amounts.
Forward-Looking and Cautionary Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which involve risks and uncertainties. You can identify forward-looking statements because they contain words such as ‘‘believes,’’ ‘‘expects,’’ ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘seeks,’’ ‘‘approximately,’’ ‘‘intends,’’ ‘‘plans,’’ ‘‘estimates’’ or ‘‘anticipates’’ or similar expressions that concern our strategy, plans or intentions. Any statements we make relating to our future operations, performance and results, and anticipated liquidity are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those we expected. We derive most of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, including, without limitation, in conjunction with the forward-looking statements included in this Form 10-Q, are disclosed in “Item 1-Business, Item 1A – Risk Factors” of our Form 10-K and Part II, Item 1A of this Form 10-Q.
We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. Our MD&A should be read in conjunction with our Form 10-K (including the information presented therein under the caption
Risk Factors
), together with our Quarterly Reports on Forms 10-Q and other publicly available information. All amounts herein are unaudited.
Our Company
Through our Fintech segment, we provide next generation blockchain-powered technologies to enable a migration to a new global financial paradigm, and, through our Biotechnology segment, we are focused on finding treatments for conditions that cause chronic pain and bringing to market drugs with non-addictive and non-sedative pain-relieving properties.
During the periods disclosed in this Quarterly Report, we operated three reportable segments:
•
Fintech: Our Fintech segment provides next generation blockchain-powered technologies for tokenization, trading, clearing, settlement, payment, and safe-keeping of digital assets
•
Biotechnology: Our Biotechnology segment is focused on finding treatments for conditions that cause severe pain and bringing to market drugs with non-addictive pain-relieving properties. We have previously announced our intention to capitalize a subsidiary with certain of our biotechnology assets, acquire an additional biotechnology asset, and then engage in a financing of that subsidiary. The short-term intended result of that series of transactions would be for to decouple it from us so that it would operate on a stand-alone basis. On May 21, 2025, the Company disclosed that June 2, 2025 would be the record date for a transaction involving the Company’s formal separation of its Biotech segment, also known as Alyea. Consequently, the Biotech segment is being presented as discontinued operations for the 13 and 26 weeks ended June 28, 2025 and June 29, 2024.
•
Corporate and Other: Our Corporate and Other segment consists of certain corporate general and administrative costs.
Adjusted EBITDA
We evaluate the performance of our operations based on financial measures such as “Adjusted EBITDA”, which is a non-U.S. GAAP financial measure. We define Adjusted EBITDA as net income (loss) before interest expense, interest income, income taxes, depreciation, amortization, stock-based compensation, and other non-cash or nonrecurring charges. We believe that Adjusted EBITDA is an important indicator of the operational strength and performance of the business, including the business’ ability to fund acquisitions and other capital expenditures, and to service its debt. Additionally, this measure is used by management to evaluate operating results and perform analytical comparisons and identify strategies to
40
improve performance. Adjusted EBITDA is also a measure that is customarily used by financial analysts to evaluate a company's financial performance, subject to certain adjustments. Adjusted EBITDA does not represent cash flows from operations, as defined by U.S. GAAP, and should not be construed as an alternative to net income or loss and is indicative neither of our results of operations, nor of cash flows available to fund all our cash needs. It is, however, a measurement that the Company believes is useful to investors in analyzing its operating performance. Accordingly, Adjusted EBITDA should be considered in addition to, but not as a substitute for, net income, cash flow provided by operating activities, and other measures of financial performance prepared in accordance with U.S. GAAP. As companies often define non-U.S. GAAP financial measures differently, Adjusted EBITDA, as calculated by the Company, should not be compared to any similarly titled measures reported by other companies.
For the Thirteen Weeks Ended June 28, 2025 and June 29, 2024
Results of Operations
The following table sets forth certain statement of operations items and as a percentage of revenue, for the periods indicated (in $000's):
| 13 Weeks Ended | 13 Weeks Ended | ||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||
| Select Data: | |||||||||||
| Revenue | $ | 6,378 | $ | 2,169 | |||||||
| Gross profit | 2,775 | 1,098 | |||||||||
| Selling, general and administrative expenses | 4,870 | 3,532 | |||||||||
| Interest (expense) income, net | (550) | 4 | |||||||||
| Net loss from continuing operations before provision of income taxes | (5,934) | (1,780) | |||||||||
| Income tax benefit from continuing operations | (432) | (2,750) | |||||||||
| Net income (loss) from continuing operations | (5,502) | 970 | |||||||||
| Net loss from discontinued operations before provision of income taxes | $ | (657) | $ | (482) | |||||||
| Income tax expense (benefit) from discontinued operations | 2,956 | (101) | |||||||||
| Net loss from discontinued operations | $ | (3,613) | $ | (381) | |||||||
| Net (loss) income | $ | (9,115) | $ | 589 | |||||||
| Adjusted EBITDA (a) | |||||||||||
| Fintech | $ | (200) | $ | 485 | |||||||
| Corporate & Other | (1,076) | — | |||||||||
| Discontinued operations | (15) | (1,402) | |||||||||
| Total Adjusted EBITDA | $ | (1,291) | $ | (917) | |||||||
| Adjusted EBITDA as a percentage of revenue | |||||||||||
| Fintech | (3.1 | %) | 22.4 | % | |||||||
| Corporate & Other | N/A | N/A | |||||||||
| Discontinued operations | N/A | N/A | |||||||||
| Consolidated adjusted EBITDA as a percentage of revenue | (20.2 | %) | (42.3 | %) | |||||||
(a)
See reconciliation of net income to Adjusted EBITDA below.
41
The following tables set forth revenues for key product and service categories, percentages of total revenue and gross profits earned by key product and service categories and gross profit percent as compared to revenues for each key product category indicated (in $000's):
| 13 Weeks Ended | 13 Weeks Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||||||||||||||
| Net Revenue | Percent of Total | Net Revenue | Percent of Total | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Fintech | $ | 6,378 | 100.0 | % | $ | 2,169 | 100.0 | % | |||||||||||||||
| Corporate & Other | — | — | % | — | — | % | |||||||||||||||||
| Discontinued operations | — | — | % | — | — | % | |||||||||||||||||
| Total revenue | $ | 6,378 | 100.0 | % | $ | 2,169 | 100.0 | % | |||||||||||||||
| 13 Weeks Ended | 13 Weeks Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||||||||||||||
| Gross Profit | Gross Profit Percentage | Gross Profit | Gross Profit Percentage | ||||||||||||||||||||
| Gross Profit | |||||||||||||||||||||||
| Fintech | $ | 2,775 | 43.5 | % | $ | 1,098 | 50.6 | % | |||||||||||||||
| Corporate & Other | — | — | % | — | — | % | |||||||||||||||||
| Discontinued operations | — | — | % | — | — | % | |||||||||||||||||
| Total gross profit | $ | 2,775 | 43.5 | % | $ | 1,098 | 50.6 | % | |||||||||||||||
Revenue
Revenue increased by approximately $4.2 million for the 13 weeks ended June 28, 2025, as compared to the 13 weeks ended June 29, 2024. The increase is due to the acquisition of ALT5 Subsidiary during May 2024, as well as Mswipe during May 2025.
Gross Profit
Gross profit increased by approximately $1.7 million for the 13 weeks ended June 28, 2025, as compared to the 13 weeks ended June 29, 2024. The increase is primarily due to the acquisition of ALT5 Subsidiary during May 2024, as well as Mswipe during May 2025.
Selling, General and Administrative Expense
Selling, general and administrative expenses increased by approximately $1.5 million for the 13 weeks ended June 28, 2025, as compared to the 13 weeks ended June 29, 2024, primarily due to the acquisition of ALT5 Subsidiary during May 2024, as well as Mswipe during May 2025.
Interest Expense, net
Interest expense, net increased by approximately $560,000 for the 13 weeks ended June 28, 2025, as compared to the 13 weeks ended June 29, 2024 primarily due to the acquisition of ALT5 Subsidiary during May 2024.
Unrealized Loss on Marketable Securities
Unrealized loss on marketable securities for the 13 weeks ended June 29, 2024 was approximately $180,000. An unrealized gain or loss on marketable securities was recorded to mark to fair value securities received in connection to the sale of GeoTraq. No such unrealized gain or loss on marketable was recorded during the 13 weeks ended June 28, 2025.
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Segment Performance
We report our business in the following segments: Fintech, Biotechnology and Corporate and Other. On May 21, 2025, the Company disclosed that June 2, 2025 would be the record date for a transaction involving the Company’s formal separation of its Biotech segment, also known as Alyea. Consequently, the Biotech segment is being presented as discontinued operations for the 13 weeks ended June 28, 2025 and June 29, 2024..
Operating loss by operating segment, is defined as loss before net interest expense, other income and expense, provision for income taxes ($000’s).
| 13 Weeks Ended June 28, 2025 | 13 Weeks Ended June 29, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fintech | Corporate and Other | Biotechnology | Total | Fintech | Corporate and Other | Biotechnology | Total | ||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 6,378 | $ | — | $ | — | $ | 6,378 | $ | 2,169 | $ | — | $ | — | $ | 2,169 | |||||||||||||||||||||||||||||||
| Cost of revenue | 3,603 | — | — | 3,603 | 1,071 | — | — | 1,071 | |||||||||||||||||||||||||||||||||||||||
| Gross profit | 2,775 | — | — | 2,775 | 1,098 | — | — | 1,098 | |||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expense | 3,854 | 1,016 | 657 | 5,527 | 837 | 2,695 | 482 | 4,014 | |||||||||||||||||||||||||||||||||||||||
| Operating (loss) income | $ | (1,079) | $ | (1,016) | $ | (657) | $ | (2,752) | $ | 261 | $ | (2,695) | $ | (482) | $ | (2,916) | |||||||||||||||||||||||||||||||
Fintech Segment
Our Fintech segment consists of ALT5 Subsidiary, which was acquired during May 2024, as well as Mswipe, which was acquired during May 2025. Revenue for the 13 weeks ended June 28, 2025 was approximately $6.4 million, and gross margin percentage was 43.5%. Operating loss for the fiscal year ended 13 weeks ended June 28, 2025 was approximately $1.1 million.
Corporate and Other Segment
Our Corporate and Other segment generated no revenue for the for the 13 weeks ended June 28, 2025 and the 13 weeks ended June 29, 2024. Selling, general and administrative expenses decreased primarily due to decreased costs for legal and other professional services.
Biotechnology Segment
On May 21, 2025, the Company disclosed that June 2, 2025 would be the record date for a transaction involving the Company’s formal separation of its Biotech segment, also known as Alyea. Consequently, the Biotech segment is being presented as discontinued operations for the 13 weeks ended June 28, 2025 and June 29, 2024. Our Biotech segment generated no revenue for the for the 13 weeks ended June 28, 2025 and the 13 weeks ended June 29, 2024. Selling, general and administrative expenses increased moderately due to increased professional fees.
For the Twenty-Six Weeks Ended June 28, 2025 and June 29, 2024
Results of Operations
The following table sets forth certain statement of operations items and as a percentage of revenue, for the periods indicated (in $000's):
43
| 26 Weeks Ended | 26 Weeks Ended | ||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||
| Select Data: | |||||||||||
| Revenue | $ | 11,892 | $ | 2,169 | |||||||
| Gross profit | 5,366 | 1,098 | |||||||||
| Selling, general and administrative expenses | 9,091 | 4,682 | |||||||||
| Interest (expense) income, net | (1,270) | (248) | |||||||||
| Loss from continuing operations before provision of income taxes | (7,970) | (3,343) | |||||||||
| Income tax benefit from continuing operations | (147) | (2,690) | |||||||||
| Net loss from continuing operations | $ | (7,823) | $ | (653) | |||||||
| Loss from discontinued operations before provision of income taxes | (1,197) | (1,138) | |||||||||
| Income tax expense (benefit) from discontinued operations | 2,956 | (236) | |||||||||
| Net loss from discontinued operations | $ | (4,153) | $ | (902) | |||||||
| Net loss | $ | (11,976) | $ | (1,555) | |||||||
| Adjusted EBITDA (a) | |||||||||||
| Fintech | $ | 106 | $ | 485 | |||||||
| Corporate & Other | (2,365) | (17) | |||||||||
| Discontinued operations | (72) | (2,208) | |||||||||
| Total Adjusted EBITDA | $ | (2,331) | $ | (1,740) | |||||||
| Adjusted EBITDA as a percentage of revenue | |||||||||||
| Fintech | 0.9 | % | 22.4 | % | |||||||
| Corporate & Other | N/A | N/A | |||||||||
| Discontinued operations | N/A | N/A | |||||||||
| Consolidated adjusted EBITDA as a percentage of revenue | (19.6 | %) | (80.2 | %) | |||||||
(a)
See reconciliation of net income to Adjusted EBITDA below.
The following tables set forth revenues for key product and service categories, percentages of total revenue and gross profits earned by key product and service categories and gross profit percent as compared to revenues for each key product category indicated (in $000's):
| 26 Weeks Ended | 26 Weeks Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||||||||||||||
| Net Revenue | Percent of Total | Net Revenue | Percent of Total | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Fintech | $ | 11,892 | 100.0 | % | $ | 2,169 | 100.0 | % | |||||||||||||||
| Corporate & Other | — | — | % | — | — | % | |||||||||||||||||
| Discontinued operations | — | — | % | — | — | % | |||||||||||||||||
| Total revenue | $ | 11,892 | 100.0 | % | $ | 2,169 | 100.0 | % | |||||||||||||||
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| 26 Weeks Ended | 26 Weeks Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||||||||||||||
| Gross Profit | Gross Profit Percentage | Gross Profit | Gross Profit Percentage | ||||||||||||||||||||
| Gross Profit | |||||||||||||||||||||||
| Fintech | $ | 5,366 | 45.1 | % | $ | 1,098 | 50.6 | % | |||||||||||||||
| Corporate & Other | — | — | % | — | — | % | |||||||||||||||||
| Discontinued operations | — | — | % | — | — | % | |||||||||||||||||
| Total gross profit | $ | 5,366 | 45.1 | % | $ | 1,098 | 50.6 | % | |||||||||||||||
Revenue
Revenue increased by approximately $9.7 million for the 26 weeks ended June 28, 2025, as compared to the 26 weeks ended June 29, 2024. The increase is due to the acquisition of ALT5 Subsidiary during May 2024, as well as Mswipe during May 2025.
Gross Profit
Gross profit increased by approximately $5.5 million for the 26 weeks ended June 28, 2025, as compared to the 26 weeks ended June 29, 2024. The increase is due to the acquisition of ALT5 Subsidiary during May 2024, as well as Mswipe during May 2025.
Selling, General and Administrative Expense
Selling, general and administrative expenses increased by approximately $4.5 million for the 26 weeks ended June 28, 2025, as compared to the 26 weeks ended June 29, 2024, The increase is due to the acquisition of ALT5 Subsidiary during May 2024, as well as Mswipe during May 2025, partially offset by a decrease in our Corporate and Other segment.
Interest Expense, net
Interest expense, net increased by approximately $1.0 million for the 26 weeks ended June 28, 2025, as compared to the 26 weeks ended June 29, 2024 primarily due to the acquisition of ALT5 Subsidiary during May 2024.
Segment Performance
We report our business in the following segments: Fintech, Biotechnology and Corporate and Other. On May 21, 2025, the Company disclosed that June 2, 2025 would be the record date for a transaction involving the Company’s formal separation of its Biotech segment, also known as Alyea. Consequently, the Biotech segment is being presented as discontinued operations for the 26 weeks ended June 28, 2025 and June 29, 2024..
Operating loss by operating segment, is defined as loss before net interest expense, other income and expense, provision for income taxes ($000’s).
| 26 Weeks Ended June 28, 2025 | 26 Weeks Ended June 29, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fintech | Corporate and Other | Biotechnology | Total | Fintech | Corporate and Other | Biotechnology | Total | ||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 11,892 | $ | — | $ | — | $ | 11,892 | $ | 2,169 | $ | — | $ | — | $ | 2,169 | |||||||||||||||||||||||||||||||
| Cost of revenue | 6,526 | — | — | 6,526 | 1,071 | — | — | 1,071 | |||||||||||||||||||||||||||||||||||||||
| Gross profit | 5,366 | — | — | 5,366 | 1,098 | — | — | 1,098 | |||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expense | 6,808 | 2,283 | 1,197 | 10,288 | 837 | 3,845 | 1,138 | 5,820 | |||||||||||||||||||||||||||||||||||||||
| Operating (loss) income | $ | (1,442) | $ | (2,283) | $ | (1,197) | $ | (4,922) | $ | 261 | $ | (3,845) | $ | (1,138) | $ | (4,722) | |||||||||||||||||||||||||||||||
45
Fintech Segment
Our Fintech segment consists of ALT5 Subsidiary, which was acquired during May 2024, as well as Mswipe, which was acquired during May 2025. Revenue for the 26 weeks ended June 28, 2025 was approximately $11.9 million, and gross margin percentage was 45.1%. Operating loss for the fiscal year ended 26 weeks ended June 29, 2024 was approximately $1.4 million.
Corporate and Other Segment
Our Corporate and Other segment generated no revenue for the for the 26 weeks ended June 28, 2025 and the 26 weeks ended June 29, 2024. Selling, general and administrative expenses decreased primarily due to decreased costs for legal and other professional services.
Biotechnology Segment
On May 21, 2025, the Company disclosed that June 2, 2025 would be the record date for a transaction involving the Company’s formal separation of its Biotech segment, also known as Alyea. Consequently, the Biotech segment is being presented as discontinued operations for the 26 weeks ended June 28, 2025 and June 29, 2024. Our Biotech segment generated no revenue for the for the 26 weeks ended June 28, 2025 and the 26 weeks ended June 29, 2024. Selling, general and administrative expenses were relatively unchanged over prior year period.
Adjusted EBITDA Reconciliation
The following table presents a reconciliation of net income to Adjusted EBITDA for the 13 weeks ended June 28, 2025 and June 29, 2024 (in 000's):
| For the 13 Weeks Ended | For the 26 Weeks Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Net income (loss) | $ | (9,115) | $ | 589 | $ | (11,976) | $ | (1,555) | |||||||||||||||
| Depreciation and amortization | 1,477 | 661 | 2,687 | 1,300 | |||||||||||||||||||
| Stock-based compensation | — | 1,162 | — | 1,507 | |||||||||||||||||||
| Interest expense (income), net | 550 | (4) | 1,270 | 248 | |||||||||||||||||||
| Income tax expense (benefit) | 2,524 | (2,852) | 2,809 | (2,928) | |||||||||||||||||||
| Unrealized loss on marketable securities | — | 180 | — | 41 | |||||||||||||||||||
| Unrealized Gain on exchange transactions | (211) | (461) | (298) | (461) | |||||||||||||||||||
| Realized loss (gain) on exchange transactions | 3,484 | (240) | 3,177 | (240) | |||||||||||||||||||
| Other nonrecurring charges | — | 48 | — | 348 | |||||||||||||||||||
| Adjusted EBITDA | $ | (1,291) | $ | (917) | $ | (2,331) | $ | (1,740) | |||||||||||||||
Adjusted EBITDA increased by approximately $0.3 million, or 40.8%, for the 13 weeks ended June 28, 2025, as compared to the prior year period. The increase was primarily due to the results of operations, as discussed above.
Adjusted EBITDA increased by approximately $0.6 million, or 34.0%, for the 26 weeks ended June 28, 2025, as compared to the prior year period. The decrease was primarily due to the results of operations, as discussed above.
Liquidity and Capital Resources
Overview
As of June 28, 2025, our cash on hand was $9.6 million. We intend to raise funds to support future development of JAN 123 either through capital raises or structured arrangements, which would include effectuating our previously announced intention to capitalize a subsidiary with certain of our biotechnology assets, acquire an additional biotechnology asset, and then engage in a financing of that subsidiary. The short-term intended result of that series of transactions would be for us to own a controlling interest in that subsidiary, but to decouple it from us so that it would operate on a stand-alone basis, although its financial statements would continue to be consolidated with ours for as long as we have a controlling interest.
46
Our ability to continue as a going concern is dependent upon the success of future capital raises or structured settlements and cash flows from the acquisition of ALT5 Subsidiary to fund the required testing to obtain FDA approval of JAN 123, as well as to fund our day-to-day operations. The accompanying financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. While we will actively pursue these additional sources of financing, management cannot make any assurances that such financing will be secured. Please review the transaction
Cash Flows
During the 26 weeks ended June 28, 2025, cash used in continuing operations was approximately $6.7 million, compared to cash used in operations of approximately $460,000 during the 26 weeks ended June 29, 2024. The decrease in cash was primarily due to results of operations as discussed above. There was no cash used in operating activities for discontinued operations during the 26 weeks ended June 28, 2025 or June 29, 2024.
Cash provided by investing activities for continued operations was $0.1 million for the 26 weeks ended June 28, 2025, compared to cash provided by investing activities of $5.9 million for the 26 weeks ended June 29, 2024. Cash provided by investing activities for the 26 weeks ended June 28, 2025 was related to the acquisition of Mswipe, and the cash provided by investing activities for the 26 weeks ended June 29, 2024 was related to cash acquired in the acquisition of ALT5 Subsidiary. There was no cash used in investing activities for discontinued operations during the 26 weeks ended June 28, 2025 or June 29, 2024.
Cash provided by financing activities was $3.7 million for the 26 weeks ended June 28, 2025, and relates to proceeds received from the issuance of notes payable, as well as warrants converted to our common stock, partially offset by cash paid for notes payable and related party notes payable. Cash used in financing activities was approximately $1.2 million for the 26 weeks ended June 29, 2024, and relates to proceeds received from warrants converted to our common stock and proceeds received from related parties, partially offset by payments on notes payable. There was no cash provided by financing activities during the 26 weeks ended June 28, 2025 or June 29, 2024.
Future Sources of Cash; Phase 2b Trials, New Acquisitions, Products, and Services
We may require additional debt financing and/or capital to finance new acquisitions, conduct our Phase IIb clinical trials, or consummate other strategic investments in our business. No assurance can be given any financing obtained may not further dilute or otherwise impair the ownership interest of our existing stockholders.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Market Risk and Impact of Inflation
Interest Rate Risk
. We do not believe there is any significant risk related to interest rate fluctuations on our short and long-term fixed rate debt.
We do not hold any derivative financial instruments, nor do we hold any securities for trading or speculative purposes.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Evaluation of Disclosure control and Procedures
. We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure..
Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of June 28, 2025, the period covered in this report, our disclosure controls and procedures were not effective because of the material weaknesses discussed below.
47
In light of the conclusion that our internal disclosure controls are ineffective as of June 28, 2025, we have applied procedures and processes as necessary to ensure the reliability of our financial reporting in regard to this Quarterly Report. Accordingly, the Company believes, based on its knowledge, that: (i) this Quarterly Report does not contain any untrue statement of a material fact or omit a material fact; and (ii) the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects our financial condition, results of operations and cash flows as of and for the periods presented in this Quarterly Report.
Management’s Report on Internal Control Over Financial Reporting
. Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of June 28, 2025. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in 2013 regarding Internal Control – Integrated Framework. Based on our assessment using those criteria, our management concluded that our internal control over financial reporting was not effective as of June 28, 2025.
Management noted material weaknesses in internal control when conducting their evaluation of internal control as of June 28, 2025. (1) Insufficient written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act; and (2) Insufficient resources to maintain adequate segregation of duties and maintain its internal control environment.
These material weaknesses remained outstanding as of the filing date of this Form 10-Q and management is currently working to remedy these outstanding material weaknesses.
The Company’s management, including the Company’s CEO and CFO, does not expect that the Company’s disclosure controls and procedures or the Company’s internal controls over financial reporting will prevent or detect all error and all fraud. A control system, regardless of how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met. These inherent limitations include the following: judgements in decision-making can be faulty, and control and process breakdowns can occur because of simple errors or mistakes, controls can be circumvented by individuals, acting alone or in collusion with each other, or by management override, the design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.
Changes in Internal Control Over Financial Reporting.
There were no changes in the Company’s internal control over financial reporting during the fiscal year ended June 28, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
48
PART II. Other Information
Item 1. Legal Proceedings
The information in response to this item is included in Note 15, Commitments and Contingencies, to the Consolidated Financial Statements included in Part I, Item 1, of this Form 10-Q.
Item 1A. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item. However, in light of the SEC Complaint, the Company provides the following additional risk factors, which supplements the risk factors previously disclosed by the Company in Part I, Item 1A, Risk Factors, of the 2024 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of funds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information.
Item 6. Exhibits.
Index to Exhibits
49
|
Exhibit
Number |
Exhibit Description | Form |
File
Number |
Exhibit
Number |
Filing
Date |
|||||||||||||||||||||||||||
| 31.1 | * | |||||||||||||||||||||||||||||||
| 31.2 | * | |||||||||||||||||||||||||||||||
| 32.1 | * | |||||||||||||||||||||||||||||||
| 32.2 | * | |||||||||||||||||||||||||||||||
| 101.INS | * | Inline XBRL Instance Document | ||||||||||||||||||||||||||||||
| 101.SCH | * | Inline XBRL Taxonomy Extension Schema Document | ||||||||||||||||||||||||||||||
| 101.CAL | * | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||||||||||||||||||||||||||||
| 101.DEF | * | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||||||||||||||||||||||||||||
| 101.LAB | * | Inline XBRL Taxonomy Extension Label Linkbase Document | ||||||||||||||||||||||||||||||
| 101.PRE | * | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) | |||||||||||||||||||||||||||||||
________________________
*
Filed herewith.
50
SIGNATURES
Pursuant to the requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on our behalf by the undersigned, thereunto duly authorized.
| ALT5 Sigma Corporation | |||||||||||
| (Registrant) | |||||||||||
| Date: |
August 12, 2025
|
By: |
/s/
Peter Tassiopoulos
|
||||||||
| Peter Tassiopoulos | |||||||||||
| Chief Executive Officer | |||||||||||
| (Principal Executive Officer) | |||||||||||
| Date: |
August 12, 2025
|
By: | /s/Tony Isaac | ||||||||
| Tony Isaac | |||||||||||
| President | |||||||||||
| (Principal Financial Officer) | |||||||||||
51
TABLE OF CONTENTS
Part I. Financial InformationItem 1. Condensed Consolidated Financial StatementsNote 1: BackgroundNote 2: Summary Of Significant Accounting PoliciesNote 3: Mergers and AcquisitionsNote 4: Discontinued OperationsNote 5: Trade and Other ReceivablesNote 6: Prepaids and Other Current AssetsNote 7: Property and EquipmentNote 8: LeasesNote 9: Intangible AssetsNote 10: GoodwillNote 11: Accrued LiabilitiesNote 12: DebenturesNote 13: DebtNote 14: Related Party DebtNote 15: Commitments and ContingenciesNote 16: Stockholders EquityNote 17: Mezzanine EquityNote 18: Earnings Per ShareNote 19: Income TaxesNote 20: Segment InformationNote 21: Related PartiesNote 22: Subsequent EventItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II. Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of FundsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits