ALT5 Sigma Corp

Previous wording

We are focused on finding treatments for conditions that cause severe pain and bringing to market drugs with non-addictive pain-relieving properties. In addition, through our now-sold subsidiaries ARCA Recycling, Connexx, and ARCA Canada, we were engaged in the business of recycling major household appliances in North America by providing turnkey appliance recycling and replacement services for utilities and other sponsors of energy efficiency programs. Also, through our now-sold GeoTraq Inc. subsidiary, we were engaged in the development and design of wireless transceiver modules with technology that provides LBS directly from global Mobile IoT networks.

Current wording

Through our Biotechnology segment, we are focused on finding treatments for conditions that cause severe pain and bringing to market drugs with non-addictive pain-relieving properties and, through our Fintech segment, we provide next generation blockchain-powered technologies to enable a migration to a new global financial paradigm. In addition, through our now-sold subsidiaries ARCA Recycling, Connexx, and ARCA Canada, we were engaged in the business of recycling major household appliances in North America by providing turnkey appliance recycling and replacement services for utilities and other sponsors of energy efficiency programs. Also, through our now-sold GeoTraq Inc. subsidiary, we were engaged in the development and design of wireless transceiver modules with technology that provides LBS directly from global Mobile IoT networks.

Previous wording

•Recycling: Our Recycling segment is a turnkey appliance recycling program. We receive fees charged for recycling, replacement and additional services for utility energy efficiency programs and have established 18 Regional Processing Centers (“RPCs”) for this segment throughout the United States and Canada. On March 9, 2023, we entered into a Stock Purchase Agreement, retroactive to March 1, 2023, with VM7 Corporation, a Delaware corporation, under which the Buyer agreed to acquire all of the outstanding equity interests of our Recycling segment. Consequently, the results for this segment are reported as discontinued operations for the 13 weeks ended April 1, 2023.

Current wording

•Recycling: Our Recycling segment is a turnkey appliance recycling program. We receive fees charged for recycling, replacement and additional services for utility energy efficiency programs and have established 18 Regional Processing Centers (“RPCs”) for this segment throughout the United States and Canada. On March 9, 2023, we entered into a Stock Purchase Agreement, retroactive to March 1, 2023, with VM7 Corporation, a Delaware corporation, under which the Buyer agreed to acquire all of the outstanding equity interests of our recycling segment. Consequently, the results for this segment are reported as discontinued operations for the 13 and 26 weeks ended June 29, 2024 and July 1, 2023.

Previous wording

Selling, general and administrative expenses increased by approximately $700,000, or 64.3%, for the 13 weeks ended March 30, 2024, as compared to the 13 weeks ended April 1, 2023, primarily due to increased amortization costs relating to the Soin intangibles, as well as stock-based compensation expense recognized due to the grants of RSU’s (see Note 13). This increase relates only to continuing operations.

Current wording

Selling, general and administrative expenses increased by approximately $3.0 million for the 13 weeks ended June 29, 2024, as compared to the 13 weeks ended July 1, 2023, primarily due to the acquisition of ALT5 Subsidiary during May 2024, stock-based compensation expense recognized due issuances of the Company’s common stock (see Note 17), as well as amortization costs relating to the Soin intangibles. This increase relates only to continuing operations.

Previous wording

We report our business in the following segments: Biotechnology and discontinued operations. We expect revenues and profits for our biotechnology segment to be driven by the development of pharmaceuticals that treat the root cause of pain but are non-opioid painkillers. We include Corporate expenses within the Biotechnology segment. As discussed above, we sold our Recycling segment in March 2023, and detail its results as discontinued operations below.

Current wording

We report our business in the following segments: Biotechnology, Fintech, and discontinued operations. We expect revenues and profits for our Biotechnology segment to be driven by the development of pharmaceuticals that treat the root cause of pain but are non-opioid painkillers, and revenues and profits for our Fintech segment to be driven by operations resulting from our recent acquisition of ALT5 Subsidiary, as discussed above. We include Corporate expenses within the Biotechnology segment. As discussed above, we sold our Recycling segment in March 2023, and detail its results as discontinued operations below.

Previous wording

Our biotechnology segment incurred expenses of approximately $1.8 million and $1.1 million related to employee costs and professional services related to research, corporate services, and stock-based compensation expense, as well as amortization of the Soin intangibles for the 13 weeks ended March 30, 2024 and the 13 weeks ended April 1, 2023, respectively.

Current wording

Our biotechnology segment incurred expenses of approximately $3.2 million and $1.1 million related to employee costs and professional services related to research, and corporate services, as well as amortization of the Soin intangibles for the 13 weeks ended June 29, 2024 and the 13 weeks ended July 1, 2023, respectively.

Previous wording

Operating loss for the 13 weeks ended March 30, 2024, increased by approximately $700,000 as compared to the prior year period. The increase is primarily due increased amortization of the Soin intangible, as well as stock-based compensation expense recognized due to the grants of RSU’s (seen Note 13).

Current wording

Selling, general and administrative expenses increased by approximately $3.7 million for the 26 weeks ended June 29, 2024, as compared to the 26 weeks ended July 1, 2023, primarily due to the acquisition of ALT5 Subsidiary during May 2024, stock-based compensation expense recognized due to the grants of RSU’s and the Company's common stock (see Note 17), as well as amortization costs relating to the Soin intangibles. This increase relates only to continuing operations.

Previous wording

Interest expense, net increased by approximately $727,000 for the 13 weeks ended March 30, 2024, as compared to the 13 weeks ended April 1, 2023 primarily due to no longer accreting the discounts in connection with the promissory note with SPYR and the receivable from VM7.

Current wording

Interest expense, net increased by approximately $1.1 million for the 26 weeks ended June 29, 2024, as compared to the 26 weeks ended July 1, 2023 primarily due to no longer accreting the discounts in connection with the promissory note with SPYR and the receivable from VM7, as well as the acquisition of ALT5 Subsidiary during May 2024.

Previous wording

As of March 30, 2024, our cash on hand was $61,000. We intend to raise funds to support future development of JAN 123 either through capital raises or structured arrangements.

Current wording

As of June 29, 2024, our cash on hand was approximately $5.8 million. We intend to raise funds to support future development of JAN 123 either through capital raises or structured arrangements.

Previous wording

Our ability to continue as a going concern is dependent upon the success of future capital raises or structured settlements 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.

Current wording

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.

Previous wording

During the 13 weeks ended March 30, 2024, cash used in operations was approximately $544,000, compared to cash provided by operations of approximately $2.4 million during the 13 weeks ended April 1, 2023. Cash provided by discontinued operations during the 13 weeks ended April 1, 2023 was approximately $2.3 million, while cash provided by continuing operations was approximately $106,000. The decrease in cash was primarily due to results of operations as discussed above.

Current wording

During the 26 weeks ended June 29, 2024, cash used in operations was approximately $460,000, compared to cash provided by operations of approximately $2.3 million during the 26 weeks ended July 1, 2023. Cash provided by discontinued operations during the 26 weeks ended July 1, 2023 was approximately $2.3 million, while cash used in continuing operations was approximately $9,000. The decrease in cash was primarily due to results of operations as discussed above.

Previous wording

Cash used in investing activities was approximately $0 and $156,000, respectively, for the 13 weeks ended March 30, 2024 and the 13 weeks ended April 1, 2023. Cash used in investing activities for the 13 weeks ended March 30, 2024 was all associated with discontinued operations and was related to purchases of property and equipment. Cash used in investing activities for the 13 weeks ended March 30, 2024 was all associated with discontinued operations and was related to purchases of property and equipment.

Current wording

Cash provided by investing activities was approximately $5.9 million for the 26 weeks ended June 29, 2024, compared to cash used in investing activities of $156,000 for the 26 weeks ended July 1, 2023. Cash provided by investing activities for the 26 weeks ended June 29, 2024 was related to cash acquired in the acquisition of ALT5 Subsidiary, while cash used in investing activities for the 26 weeks ended July 1, 2023 was all associated with discontinued operations and was related to purchases of property and equipment.

Previous wording

Cash provided by financing activities was $600,000 for the 13 weeks ended March 30, 2024, and relates to proceeds received from warrants converted to our common stock. Cash used in financing activities was approximately $2.0 million for the 13 weeks ended April 1, 2023. Cash used in financing activities from discontinued operations for the 13 weeks ended April 1, 2023 was approximately $2.2 million and was primarily due to the repayment of debt obligations. Cash provided financing activities from continued operations for the 13 weeks ended April 1, 2023 was approximately $163,000 and was related to $368,000 in proceeds from equity financing, partially offset by $205,000 in debt repayments..

Current wording

Cash provided by financing activities was $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. Cash used in financing activities was approximately $2.1 million for the 26 weeks ended July 1, 2023. Cash used in financing activities from discontinued operations for the 26 weeks ended July 1, 2023 was approximately $2.2 million and was primarily due to the repayment of debt obligations. Cash provided financing activities from continued operations for the 26 weeks ended July 1, 2023 was approximately $94,000 and was related to $368,000 in proceeds from equity financing, partially offset by $274,000 in debt repayments.

Previous wording

We continue to face a challenging competitive environment as we continue to focus on raising capital and managing expenses. We reported a net loss of approximately $2.1 million from continuing operations in for the 13 weeks ended March 30, 2024, and a net loss from continuing operations of approximately $662,000 for the 13 weeks ended April 1, 2023 primarily due to increased amortization expense of the Soin intangible, stock-based compensation expense of $345,000, and an increase in interest expense of approximately $700,000 due to due to no longer accreting the discounts in connection with the promissory note with SPYR and the receivable from VM7. Additionally, the Company has total current assets of approximately $1.2 million and total current liabilities of approximately $8.1 million resulting in a net negative working capital of approximately $6.9 million. Cash used in continuing operations was approximately $544,000.

Current wording

We continue to face a challenging competitive environment as we continue to focus on raising capital and managing expenses. We reported a net loss of approximately $1.6 million from continuing operations in for the 26 weeks ended June 29, 2024, and a net loss from continuing operations of approximately $583,000 for the 26 weeks ended July 1, 2023 primarily due to increased amortization expense of the Soin intangible and stock-based compensation expense of $1.5 million. Additionally, the Company has total current assets of approximately $30.9 million and total current liabilities of approximately $42.5 million resulting in a net negative working capital of approximately $11.6 million. Cash used in continuing operations was approximately $464,000.

Previous wording

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.

Current wording

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. We acquired ALT5 Subsidiary during May 2024, as discussed above.