Summary and Analysis of Key Points

Overview of the Company’s Financial Performance

The company reported a net loss of approximately $2.4 million from continuing operations for the 39 weeks ended September 28, 2024, compared to a net loss of $825,000 for the same period in the prior year. This was primarily due to increased amortization expense of the Soin intangible and stock-based compensation expense of $1.5 million. The company also has a net negative working capital of approximately $10.4 million, with total current assets of $31.9 million and total current liabilities of $42.3 million.

Revenue and Profit Trends

Revenue increased by approximately $3.3 million for the 39 weeks ended September 28, 2024, compared to the same period in the prior year. This increase was due to the acquisition of ALT5 Subsidiary in May 2024, which contributed $7.1 million in revenue. However, this was partially offset by the lack of revenue from the company’s discontinued Recycling segment.

Gross profit percentage for the ALT5 Subsidiary was 48.6% for the 39 weeks ended September 28, 2024. The company’s overall gross profit margin improved from -5.2% in the prior year to 48.6% in the current year, driven by the higher-margin Fintech segment.

Strengths and Weaknesses

Strengths:

• Successful acquisition of ALT5 Subsidiary, which has contributed significant revenue and profitability to the company’s Fintech segment.
• Improvement in overall gross profit margin due to the higher-margin Fintech business.

Weaknesses:

• Continued net losses from the Biotechnology segment, which incurred expenses of $6.6 million for the 39 weeks ended September 28, 2024.
• Negative working capital position, with current liabilities exceeding current assets by $10.4 million.
• Material weaknesses in internal control over financial reporting, including insufficient documentation of policies and procedures and inadequate segregation of duties.

Outlook for the Future

The company plans to raise additional funds to support the future development of its JAN 123 drug candidate, either through capital raises or structured arrangements. The company’s ability to continue as a going concern is dependent on the success of these future financing efforts, as well as the cash flows from the ALT5 Subsidiary acquisition.

The company also faces challenges in remedying the material weaknesses identified in its internal control over financial reporting, which could impact the reliability of its financial reporting going forward. Addressing these control deficiencies will be a key focus area for the company.

Overall, the company’s financial performance has been mixed, with the Fintech segment providing a source of revenue and profitability, but the Biotechnology segment continuing to generate losses. The company’s future success will depend on its ability to secure additional financing, effectively integrate and grow the ALT5 Subsidiary, and address the weaknesses in its internal control environment.