ALT5 Sigma Corporation(ALTS) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements for ALT5 Sigma Corporation for the quarterly period ended June 28, 2025, including balance sheets, statements of operations, cash flows, and stockholders' equity, along with detailed notes Condensed Consolidated Balance Sheets Presents the company's financial position, including assets, liabilities, and equity, as of June 28, 2025, and December 28, 2024 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 28, 2025 | December 28, 2024 | | :--- | :--- | :--- | | Total Assets | $94,686 | $82,436 | | Total current assets | $33,748 | $35,001 | | Goodwill | $20,131 | $11,714 | | Intangible assets, net | $24,813 | $18,674 | | Total Liabilities | $61,579 | $53,769 | | Digital assets payable | $23,579 | $30,918 | | Notes payable (Current & Noncurrent) | $21,551 | $11,570 | | Total Stockholders' Equity | $29,251 | $24,811 | - Total assets increased to $94.7 million from $82.4 million, primarily driven by a significant rise in Goodwill and Intangible Assets resulting from recent acquisitions. Total liabilities also increased, mainly due to higher Notes Payable[10] Condensed Consolidated Statements of Operations and Comprehensive Income Presents the company's financial performance, including revenues, expenses, and net loss, for the quarterly and year-to-date periods ended June 28, 2025 Statement of Operations Summary (in thousands, except per-share amounts) | Metric | Q2 2025 (13 weeks) | Q2 2024 (13 weeks) | 26 Weeks 2025 | 26 Weeks 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $6,378 | $2,169 | $11,892 | $2,169 | | Gross Profit | $2,775 | $1,098 | $5,366 | $1,098 | | Operating Loss | $(2,095) | $(2,434) | $(3,725) | $(3,584) | | Net (Loss) Income from Continuing Operations | $(5,502) | $970 | $(7,823) | $(653) | | Net Loss from Discontinued Operations | $(3,613) | $(381) | $(4,153) | $(902) | | Net (Loss) Income | $(9,115) | $589 | $(11,976) | $(1,555) | | Net (Loss) Income Per Share, Basic | $(0.49) | $0.07 | $(0.70) | $(0.18) | - Revenues for the 13 and 26 weeks ended June 28, 2025, increased significantly year-over-year, driven by acquisitions in the Fintech segment. However, the company reported a substantial net loss of $9.1 million for Q2 2025, compared to a net income of $0.6 million in Q2 2024, largely due to a realized loss on exchange transactions and losses from discontinued operations[12] Condensed Consolidated Statements of Cash Flows Details the company's cash inflows and outflows from operating, investing, and financing activities for the 26-week periods ended June 28, 2025 Cash Flow Summary (in thousands) | Cash Flow Activity | 26 Weeks Ended June 28, 2025 | 26 Weeks Ended June 29, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,727) | $(464) | | Net cash provided by investing activities | $122 | $5,853 | | Net cash provided by financing activities | $3,703 | $1,177 | | Increase in Cash and Cash Equivalents | $2,383 | $5,759 | | Cash and Cash Equivalents, end of period | $9,560 | $5,764 | - For the 26 weeks ended June 28, 2025, the company used $6.7 million in cash from operations. Cash from investing activities was minimal at $0.1 million from the Mswipe acquisition, a sharp decrease from the prior year's $5.9 million which included cash from the ALT-5 acquisition. Financing activities provided $3.7 million, primarily from the issuance of notes payable[15] Notes to Unaudited Condensed Consolidated Financial Statements Provides detailed explanations of the company's accounting policies, recent acquisitions, segment reporting, and other significant financial disclosures - The company changed its name from 'JanOne Inc.' to 'ALT5 Sigma Corporation' and its ticker from 'JAN' to 'ALTS' effective July 15, 2024[20] - The company operates in two segments: Fintech and Biotechnology. The Biotechnology segment is now presented as discontinued operations due to a planned spinoff of its subsidiary, Alyea Therapeutics Corporation[21] - The Fintech segment, which provides blockchain-powered technologies, is the company's core continuing operation. It includes platforms like 'ALT5 Pay' and 'ALT5 Prime' and was expanded through the acquisitions of ALT5 Subsidiary and Mswipe[22][23] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance for the 13 and 26-week periods ending June 28, 2025, attributing significant revenue increases to acquisitions and covering segment results, Adjusted EBITDA reconciliation, and liquidity Q2 2025 vs Q2 2024 Performance (in thousands) | Metric | Q2 2025 (13 weeks) | Q2 2024 (13 weeks) | | :--- | :--- | :--- | | Revenue | $6,378 | $2,169 | | Gross Profit | $2,775 | $1,098 | | Net (Loss) Income | $(9,115) | $589 | | Total Adjusted EBITDA | $(1,291) | $(917) | - Revenue for Q2 2025 increased by approximately $4.2 million compared to Q2 2024, driven entirely by the acquisitions of ALT5 Subsidiary (May 2024) and Mswipe (May 2025) in the Fintech segment[178] - The company's cash on hand was $9.6 million as of June 28, 2025. Management states that the ability to continue as a going concern depends on future capital raises to fund operations and the development of its biotechnology asset, JAN 123[205][206] Adjusted EBITDA Reconciliation Summary (in thousands) | Period | Net (Loss) Income | Adjusted EBITDA | | :--- | :--- | :--- | | 13 Weeks Ended | | | | June 28, 2025 | $(9,115) | $(1,291) | | June 29, 2024 | $589 | $(917) | | 26 Weeks Ended | | | | June 28, 2025 | $(11,976) | $(2,331) | | June 29, 2024 | $(1,555) | $(1,740) | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that it does not believe there is any significant risk related to interest rate fluctuations on its fixed-rate debt and confirms no holdings of derivative financial instruments or securities for trading or speculative purposes - The company does not believe it has significant risk from interest rate fluctuations on its debt[211] - The company does not hold any derivative financial instruments or engage in speculative securities trading[212] Item 4. Controls and Procedures Management concluded that as of June 28, 2025, the company's disclosure controls and procedures were not effective due to identified material weaknesses, specifically insufficient written documentation and resources for segregation of duties - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were not effective as of June 28, 2025[214] - Management identified two material weaknesses in internal control: (1) Insufficient written documentation of internal control policies and procedures, and (2) Insufficient resources to maintain adequate segregation of duties[218] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 15 of the financial statements for information on legal proceedings, including a settled SEC complaint and ongoing cases - Information regarding legal proceedings is detailed in Note 15 of the Consolidated Financial Statements[224] Item 1A. Risk Factors As a smaller reporting company, ALT5 Sigma is not required to provide this information but has chosen to supplement its previous disclosures from the 2024 Form 10-K, particularly in light of the SEC Complaint - The company is a smaller reporting company and is not required to provide risk factors, but has chosen to supplement its previous disclosures from the 2024 10-K[225] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - None reported for the period[226]