AI Financial Corp

Previous wording

In addition, the foregoing factors may generally affect our business, results of operations and financial position. Forward-looking statements speak only as of the date the statements were made. We do not undertake and specifically decline any obligation to update any forward-looking statements. Any information contained on our website www.janone.com or any other websites referenced in this Form 10-K are not part of this Form 10-K.

Current wording

In addition, the foregoing factors may generally affect our business, results of operations and financial position. Forward-looking statements speak only as of the date the statements were made. We do not undertake and specifically decline any obligation to update any forward-looking statements. Any information contained on our website www.alt5sigma.com or any other websites referenced in this Form 10-K are not part of this Form 10-K.

Previous wording

•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.

Current wording

•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.

Previous wording

Selling, general and administrative expenses from continuing operations increased by approximately $1.6 million for the fiscal year ended December 30, 2023, as compared to the year ended December 31, 2022, primarily due to increased amortization costs relating to the Soin intangibles. Selling, general and administrative expenses from discontinued operations decreased by approximately $7.2 million. The decrease is due to the disposition of our recycling segment as of March 1, 2023.

Current wording

Selling, general and administrative expenses from continuing operations increased by approximately $7.6 million for the fiscal year ended December 28, 2024, as compared to the year ended December 30, 2023, primarily due to the acquisition of ALT5 Subsidiary during May 2024, increased amortization costs relating to the Soin intangibles in our Biotech segment, and increased stock-based compensation expense related to grants of RSU's, as well as costs for professional services in our Corporate and Other segment.

Previous wording

Interest income, net, increased by approximately $1.8 million for the fiscal year ended December 30, 2023, as compared to the year ended December 31, 2022, primarily due to the accretion of discount in connection with the promissory notes with SPYR and VM7, as well as interest recorded on the note with SPYR.

Current wording

Interest expense, net, was approximately $880,000 for the fiscal year ended December 28, 2024, as compared to interest income, net, of approximately $2.3 million for the year ended December 30, 2023. The change was primarily due to no longer accreting the discounts in connection with the promissory note with SPYR and the receivable from VM7, promissory notes entered into during the year ended December 28, 2024, as well as the acquisition of ALT5 Subsidiary during May 2024.

Previous wording

Unrealized loss on marketable securities for the fiscal year ended December 30, 2023 was approximately $926,000, as compared to a loss of approximately $631,000 for the fiscal year ended December 31, 2022. An unrealized gain or loss on marketable securities is recorded to mark to fair value securities received in connection to the sale of GeoTraq.

Current wording

Unrealized loss on marketable securities for the fiscal year ended December 28, 2024 was approximately $1.1 million, as compared to a loss of approximately $925,000 for the fiscal year ended December 30, 2023. An unrealized gain or loss on marketable securities is recorded to mark to fair value securities received in connection to the sale of GeoTraq.

Previous wording

Discontinued operations consists of our Recycling segment, which was disposed of effective March 1, 2023, and our Technology segment, which was disposed of during May 2022. Operating income for the fiscal year ended December 30, 2023 increased by approximately $2.0 million, as compared to the fiscal year ended December 31, 2022. The increase in operating income is primarily due to the gain on sale of the Recycling Subsidiaries of approximately $12.1 million during fiscal 2023, partially offset by the gain on the sale of the GeoTraq intangible, in the amount of approximately $9.4 million during the year ended December 31, 2022, as well as reduced operating expenses for the year ended December 30, 2023 due to the sale of the Recycling Subsidiaries.

Current wording

Discontinued operations consist of our Recycling segment, which was disposed of effective March 1, 2023. We had no discontinued operations for the fiscal year ended December 28, 2024.

Previous wording

As of December 30, 2023, our cash on hand was approximately $5,000. We intend to raise funds to support future development of JAN 123 either through capital raises or structured arrangements.

Current wording

As of December 28, 2024, our cash on hand was approximately $7.2 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.

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 fiscal year ended December 30, 2023, cash used in operations was approximately $855,000, compared to cash used in operations of approximately $557,000 during the fiscal year ended December 31, 2022. Cash provided by operating activities from discontinued operations during the fiscal year ended December 30, 2023 was approximately $2.3 million, as compared to cash used in operating activities of approximately $2.5 million for the fiscal year ended December 31, 2022. The changes in cash was primarily due to results of operations as discussed above.

Current wording

During the fiscal year ended December 28, 2024, cash provided by operations was approximately $1.8 million, compared to cash provided by operations of approximately $855,000 during the fiscal year ended December 30, 2023. Cash provided by operating activities from discontinued operations during the fiscal year ended December 30, 2023 was approximately $2.3 million. We had no discontinued operations during the fiscal year ended December 28, 2024. The change in cash was primarily due to results of operations as discussed above.

Previous wording

Cash used in investing activities was approximately $156,000 and $1.5 million, respectively, for the fiscal years ended December 30, 2023 and December 31, 2022. Cash used in investing activities 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 fiscal year ended December 28, 2024, compared to cash used in investing activities of approximately $156,000 for the fiscal year ended December 30, 2023. Cash provided by investing activities for the fiscal year ended December 28, 2024 was related to cash acquired in the acquisition of ALT5 Subsidiary, while cash used in investing activities for the fiscal year ended December 30, 2023 was all associated with discontinued operations and was related to purchases of property and equipment.

Previous wording

Cash provided by financing activities was approximately $777,000 for the fiscal year ended December 30, 2023. Cash used in financing activities from discontinued operations for the fiscal year ended December 30, 2023 was approximately $2.2 million and was primarily due to the repayment of debt obligations in the amount of approximately $7.3 million, partially offset by proceeds from the issuance of debt obligations of approximately $5.1 million. Cash used by financing activities was approximately $14,000 for the fiscal year ended December 31, 2022. Cash provided by financing activities from discontinued operations for fiscal year ended December 31, 2022 was approximately $4.0 million, and was primarily due to proceeds from the issuance of notes payable of approximately $17.5 million, partially offset by payments on notes payable of approximately $13.4 million, and payment on related party debt of approximately $162,000.

Current wording

Cash provided by financing activities was approximately $6.1 million for the fiscal year ended December 28, 2024, and relates to proceeds from notes payable, proceeds from equity financing and warrants exercised, and proceeds from related party notes payable, partially offset by payments on notes payable, as well as payments on related party notes payable. Cash provided by financing activities was approximately $777,000 for the fiscal year ended December 30, 2023. Cash used in financing activities from discontinued operations for the fiscal year ended December 30, 2023 was approximately $2.2 million and was primarily due to the repayment of debt obligations in the amount of approximately $7.3 million, partially offset by proceeds from the issuance of debt obligations of approximately $5.1 million.

Previous wording

We acknowledge that we continue to face a challenging competitive environment as we continue to focus on our overall profitability, including managing expenses. We reported a net loss of approximately $7.7 million from continuing operations for the fiscal year ended December 30, 2023, and net income from continuing operations of approximately $8.0 million for the fiscal year ended December 31, 2022, for the reasons discussed above. Additionally, the Company has total current assets of approximately $350,000 and total current liabilities approximately of $5.6 million, resulting in a net negative working capital of approximately $5.2 million. Cash used in operations was approximately $855,000.

Current wording

We acknowledge that we continue to face a challenging competitive environment as we continue to focus on our overall profitability, including managing expenses. We reported a net loss of approximately $6.2 million for the fiscal year ended December 28, 2024, and net loss from continuing operations of approximately $17.1 million for the fiscal year ended December 30, 2023, for the reasons discussed above. Additionally, the Company has total current assets of approximately $35.0 million and total current liabilities approximately of $40.9 million, resulting in a net negative working capital of approximately $5.9 million. Cash provided operations was approximately $1.0 million.

Previous wording

We will 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 acquired ALT5 Subsidiary during May 2024, as discussed above. We may require additional debt financing and/or capital to finance new acquisitions or consummate other strategic investments in our business. We currently expect that the biotechnology subsidiary transaction discussed above will allow us to finance our Phase IIb clinical trials, No assurance can be given any financing obtained may not further dilute or otherwise impair the ownership interest of our existing stockholders or our ownership interest in the to-be-effectuated biotechnology subsidiary.