AI Financial Corp
For the period ended Mar 29, 2025. Filed May 13, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 29, 2025 · Filed May 13, 2025
AIFC$0.17+6.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-28; filed 2024-11-12.
0001628280-24-047204
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-29; filed 2025-05-13.
0001628280-25-025004
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 56 previous paragraphs and 52 current paragraphs.
21 unchanged; 11 reworded; 20 added; 19 removed; 5 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
Our Company
Current report
•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.
Current report
•Corporate and Other: Our Corporate and Other segment consists of certain corporate general and administrative costs.
Current report
Adjusted EBITDA
Current report
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 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.
Current report
(a)See reconciliation of net income to Adjusted EBITDA below.
Current report
Revenue increased by approximately $5.5 million for the 13 weeks ended March 29, 2025, as compared to the 13 weeks ended March 30, 2024. The increase is due to the acquisition of ALT5 Subsidiary during May 2024.
Current report
Gross Profit
Current report
Selling, general and administrative expenses increased by approximately $3.0 million for the 13 weeks ended March 29, 2025, as compared to the 13 weeks ended March 30, 2024, primarily due to the acquisition of ALT5 Subsidiary during May 2024.
Current report
Interest Expense, net
Current report
Interest expense, net increased by approximately $470,000 for the 13 weeks ended March 29, 2025, as compared to the 13 weeks ended March 30, 2024 primarily due to the acquisition of ALT5 Subsidiary during May 2024.
Current report
Unrealized Loss on Marketable Securities
Current report
Unrealized loss on marketable securities for the 13 weeks ended March 30, 2024 was approximately $190,000. 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 March 29, 2025.
Current report
Our Fintech segment consists of ALT5 Subsidiary, which was acquired during May 2024. Revenue for the 13 weeks ended March 29, 2025 was approximately $5.5 million, and gross margin percentage was 47.0%. Operating loss for the fiscal year ended 13 weeks ended March 29, 2025 was approximately $360,000.
Current report
Our Biotech segment generated no revenue for the for the 13 weeks ended March 29, 2025 and the 13 weeks ended March 30, 2024. Selling, general and administrative expenses increased primarily due to increased amortization costs relating to the Soin intangibles.
Current report
Corporate and Other Segment
Current report
Our Corporate and Other segment generated no revenue for the for the 13 weeks ended March 29, 2025 and the 13 weeks ended March 30, 2024. Selling, general and administrative expenses increased primarily due to increased costs for legal and other professional services.
Current report
Adjusted EBITDA Reconciliation
Current report
The following table presents a reconciliation of net income to Adjusted EBITDA for the 13 weeks ended March 29, 2025 and March 30, 2024 (in 000's):
Current report
Adjusted EBITDA increased by approximately $0.3 million, or 67.1%, for the 13 weeks ended March 29, 2025, as compared to the prior year period. The increase was primarily due to the results of operations, as discussed above.
Removed paragraphs (19)
Previous report
Revenue increased by approximately $4.9 million for the 13 weeks ended September 28, 2024, as compared to the 13 weeks ended September 30, 2023. The increase is due to the acquisition of ALT5 Subsidiary during May 2024.
Previous report
Cost of Revenue
Previous report
Selling, general and administrative expenses increased by approximately $2.8 million for the 13 weeks ended September 28, 2024, as compared to the 13 weeks ended September 30, 2023, primarily due to the acquisition of ALT5 Subsidiary during May 2024, as well as the allowance recorded against the SPYR receivable (see Note 5). This increase relates only to continuing operations.
Previous report
Interest Income, net
Previous report
Interest income, net decreased by approximately $500,000 for the 13 weeks ended September 28, 2024, as compared to the 13 weeks ended September 30, 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 report
Our biotechnology segment incurred expenses of approximately $1.6 million and $764,000 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 September 28, 2024 and the 13 weeks ended September 30, 2023, respectively.
Previous report
Our fintech segment, which includes ALT5 Subsidiary, which was acquired during May 2024. Revenue for the 13 weeks ended September 28, 2024, was approximately $4.9 million, while cost of revenue was approximately $2.6 million. Operating income for the 13 weeks ended September 28, 2024 was approximately $353,000. On November 8, 2024, we entered into an agreement with a vendor of services to ALT5 Subsidiary, pursuant to which we acquired certain assets of the vendor that ALT5 Subsidiary has been using. A detailed description of the transaction is included in Note 23, Subsequent event, to the Consolidated Financial Statements included in Part I, Item 1, of this Form 10-Q.
Previous report
For the Twenty-Six Weeks Ended September 28, 2024 and September 30, 2023
Previous report
Results of Operations
Previous report
Revenue
Previous report
Revenue increased by approximately $3.3 million for the 39 weeks ended September 28, 2024, as compared to the 39 weeks ended September 30, 2023. The increase is due to the acquisition of ALT5 Subsidiary during May 2024, partially offset by no revenue from discontinued operations during the 39 weeks ended September 28, 2024.
Previous report
Cost of Revenue
Previous report
Cost of revenue decreased by approximately $341,000 for the 39 weeks ended September 28, 2024, as compared to the 39 weeks ended September 30, 2023. The decrease is due to no cost of revenue from discontinued operations, partially offset by the acquisition of ALT5 Subsidiary during May 2024. Gross profit percentage for ALT5 Subsidiary was 48.6% for the 39 weeks ended September 28, 2024.
Previous report
Selling, General and Administrative Expense
Previous report
Selling, general and administrative expenses increased by approximately $5.0 million for the 39 weeks ended September 28, 2024, as compared to the 39 weeks ended September 30, 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 report
Interest Income, net
Previous report
Interest expense, net decreased by approximately $1.6 million for the 39 weeks ended September 28, 2024, as compared to the 39 weeks ended September 30, 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 report
Segment Performance
Reworded paragraphs (11)
Previous wording
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 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 sale of subsidiaries ARCA Recycling, Connexx, ARCA Canada and, GeoTraq Inc., we have exited these legacy businesses; Consequently, the results for these businesses are reported as discontinued operations for the 13 and 39 weeks ended September 28, 2024 and September 30, 2023.
Current wording
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.
Previous wording
During the periods disclosed in this Quarterly Report, we operated two reportable segments:
Current wording
During the periods disclosed in this Quarterly Report, we operated three reportable segments:
Previous wording
The following table sets forth certain statement of operations items for the periods indicated (in $000’s):
Current wording
The following table sets forth certain statement of operations items and as a percentage of revenue, for the periods indicated (in $000's):
Previous wording
Cost of revenue increased by approximately $2.6 million for the 13 weeks ended September 28, 2024, as compared to the 13 weeks ended September 30, 2023. The increase is due to the acquisition of ALT5 Subsidiary during May 2024.
Current wording
Gross profit increased by approximately $2.6 million for the 13 weeks ended March 29, 2025, as compared to the 13 weeks ended March 30, 2024. The increase is due to the acquisition of ALT5 Subsidiary during May 2024.
Previous 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.
Current 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.
Previous wording
As of September 28, 2024, our cash on hand was approximately $8.7 million. We intend to raise funds to support future development of JAN 123 either through capital raises or structured arrangements.
Current wording
As of March 29, 2025, our cash on hand was $10.8 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
During the 39 weeks ended September 28, 2024, cash provided by operations was approximately $3.7 million, compared to cash provided by operations of approximately $1.9 million during the 39 weeks ended September 30, 2023. Cash provided by discontinued operations during the 39 weeks ended September 30, 2023 was approximately $2.3 million, while cash used in continuing operations was approximately $448,000. The decrease in cash was primarily due to results of operations as discussed above.
Current wording
During the 13 weeks ended March 29, 2025, cash used in operations was approximately $1.5 million, compared to cash provided by operations of approximately $544,000 during the 13 weeks ended March 30, 2024. The decrease in cash was primarily due to results of operations as discussed above.
Previous wording
Cash provided by investing activities was approximately $5.9 million for the 39 weeks ended September 28, 2024, compared to cash used in investing activities of $156,000 for the 39 weeks ended September 30, 2023. Cash provided by investing activities for the 39 weeks ended September 28, 2024 was related to cash acquired in the acquisition of ALT5 Subsidiary, while cash used in investing activities for the 39 weeks ended September 30, 2023 was all associated with discontinued operations and was related to purchases of property and equipment.
Current wording
Cash used in investing activities was $0 for the 13 weeks ended March 29, 2025 and the 13 weeks ended March 30, 2024.
Previous wording
Cash provided by financing activities was $2.1 million for the 39 weeks ended September 28, 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, and payment on related party notes payable. Cash used in financing activities was approximately $1.4 million for the 39 weeks ended September 30, 2023. Cash used in financing activities from discontinued operations for the 39 weeks ended September 30, 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 39 weeks ended September 30, 2023 was approximately $777,000 and was $792,000 in proceeds from equity financing and $259,000 from warrants issued, partially offset by $274,000 in debt repayments.
Current wording
Cash provided by financing activities was $1.5 million for the 13 weeks ended March 29, 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. Cash used in financing activities was approximately $600,000 for the 13 weeks ended March 30, 2024, and relates to proceeds received from warrants converted to our common stock.
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 $2.4 million from continuing operations in for the 39 weeks ended September 28, 2024, and a net loss from continuing operations of approximately $825,000 for the 39 weeks ended September 30, 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 $31.9 million and total current liabilities of approximately $42.3 million resulting in a net negative working capital of approximately $10.4 million. Cash used in continuing operations was approximately $3.7 million.
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 $2.1 million for the 13 weeks ended March 29, 2025, and a net loss of approximately $2.9 million for the 13 weeks ended March 30, 2024, primarily due to increased costs associated with the acquisition ALT5 Subsidiary. Additionally, the Company has total current assets of approximately $31.8 million and total current liabilities of approximately $38.2 million resulting in a net negative working capital of approximately $6.4 million. Cash used in operations was approximately $1.5 million.
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. We acquired ALT5 Subsidiary during May 2024, as discussed above.
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.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
•Biotechnology: Our Biotechnology segment is focused on finding treatments for conditions that cause chronic pain and bringing to market drugs with non-addictive and non-sedating pain-relieving properties.
Previous report — wording carried elsewhere
The following table sets forth certain statement of operations items for the periods indicated (in $000’s):
Previous report — wording carried elsewhere
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):
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
Operating loss by operating segment, is defined as loss before net interest expense, other income and expense, provision for income taxes ($000’s).