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Mergers and Acquisitions | 9 Months Ended
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Sep. 28, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Mergers and Acquisitions | Mergers and Acquisitions ALT5 On May 15, 2024, the Company acquired its ALT5 Subsidiary, which is a fintech company that provides next generation blockchain-powered technologies to enable a migration to a new global financial paradigm. ALT5 Subsidiary, through its respective subsidiaries, offers two main platforms to its customers: “ALT5 Pay” and “ALT5 Prime.” ALT5 Pay is a crypto-currency payment gateway that enables registered and approved global merchants to accept and make crypto-currency payments or to integrate the ALT5 Pay payment platform into their application or operations using the plugin with WooCommerce and or ALT5 Pay’s checkout widgets and APIs. Merchants have the option to convert to fiat currency (US Dollars, Canadian Dollars, Euros, and British Pounds Sterling) automatically or to receive their payment in digital assets. As consideration under the acquisition, the Company issued 1,799,100 shares of its common stock to the legacy equity holders of the capital stock of ALT5 Subsidiary. Those shares represented approximately 19.9% of the Company's then-issued and outstanding shares of common stock. Each of the shares of the Company's newly-issued common stock was valued at $4.14, which was the Nasdaq Historical NOCP on Thursday, May 9, 2024, the day immediately prior to the date on which the agreement was executed. The Company also issued 34,207 shares of its newly-designated Series B Preferred Stock (the “Series B Stock”) to the legacy equity holders of the capital stock of ALT5. In connection with the closing of the acquisition of ALT5 Subsidiary, the Company also issued 3,200 shares of its newly-designated Series M Preferred Stock (the “Series M Stock”) to two entities that acted as finders for the transaction. The fair value of the purchase price components outlined above was $16.0 million due to fair value adjustments for the shares of Series B Stock and Series M Stock, as detailed below (in $000’s):
Common stock |  | $ | 7,448 |
Series B preferred stock |  | 8,552 |
Total purchase price |  | $ | 16,000 |
Under the preliminary purchase price allocation, the Company recognized goodwill of approximately $3.8 million, which is calculated as the excess of both the consideration exchanged and liabilities assumed as compared to the fair value of the identifiable assets acquired. The values assigned to the assets acquired and liabilities assumed are based on their estimates of fair value available as of May 10, 2024, as calculated by an independent third-party firm. Because the transaction was considered a stock purchase for tax purposes, none of the goodwill arising from the acquisition will be deductible for tax purposes. During the thirteen weeks ended September 28, 2024, the Company recorded a noncash fair value adjustment related to deferred tax liabilities in the aggregate amount of approximately $3.9 million, which was recorded to goodwill. The table below outlines the purchase price allocation of the purchase for ALT5 Subsidiary to the acquired identifiable assets, liabilities assumed and goodwill (in $000’s):
Total purchase price |  |  | $ | 16,000 |
Accounts payable |  |  | 267 |
Digital assets payable |  |  | 16,763 |
Debt |  |  | 7,613 |
Total liabilities assumed |  |  | 24,643 |
Total consideration |  |  | 40,643 |
Cash |  |  | 5,853 |
Accounts receivable |  |  | 2,917 |
Digital assets receivable |  |  | 9,082 |
Intangible assets |  |  |
Customer relationships |  | $ | 13,925 |  |
Trade names |  | 2,675 |  |
Developed technology |  | 1,850 |  |
Subtotal intangible assets |  |  | 18,450 |
Other |  |  | 492 |
Total assets acquired |  |  | 36,794 |
Total goodwill |  |  | $ | 3,849 |
and an Proforma Information The table below presents selected proforma information for the Company for the thirteen and twenty-six week periods ended September 28, 2024, assuming that the acquisition had occurred on January 1, 2023 (the beginning of the Company’s 2023 fiscal year), pursuant to ASC 805-10-50 (in $000’s). This proforma information does not purport to represent what the actual results of operations of the Company would have been had the acquisition occurred on that date, nor does it purport to predict the results of operations for future periods.
| As Reported |  | Adjustments |  | Proforma
| ALT5 Sigma Corporation Unaudited 13 weeks ended September 28, 2024 |  | ALT5 Subsidiary Unaudited 13 weeks ended September 28, 2024 |  | Adjustments(1) |  | ALT5 Sigma Corporation for the 13 weeks ended September 28, 2024
Net revenue | $ | 4,941 |  |  | $ | — |  |  |  |  | $ | 4,941 |
Net income | $ | (822) |  |  | $ | — |  |  | $ | — |  |  | $ | (822) |
Earnings per basic common share | $ | (0.06) |  |  |  |  |  |  | $ | 0.10 |
Earnings per basic diluted share | $ | (0.06) |  |  |  |  |  |  | $ | 0.10 |
| As Reported |  | Adjustments |  | Proforma
| ALT5 Sigma Corporation Unaudited 13 weeks ended September 30, 2023 |  | ALT5 Subsidiary Unaudited 13 weeks ended September 30, 2023 |  | Adjustments(1) |  | ALT5 Sigma Corporation for the 13 weeks ended September 30, 2023
Net revenue | $ | — |  |  | $ | 1,657 |  |  |  |  | $ | 1,657 |
Net income | $ | (214) |  |  | $ | 953 |  |  | $ | (537) |  |  | $ | 202 |
Earnings per basic common share | $ | (0.05) |  |  |  |  |  |  | $ | 0.05 |
Earnings per basic diluted share | $ | (0.05) |  |  |  |  |  |  | $ | 0.05 |
| As Reported |  | Adjustments |  | Proforma
| ALT5 Sigma Corporation Unaudited 39 weeks ended September 28, 2024 |  | ALT5 Subsidiary Unaudited 39 weeks ended September 28, 2024 |  | Adjustments(1) |  | ALT5 Sigma Corporation for the 39 weeks ended September 28, 2024
Net revenue | $ | 7,110 |  |  | $ | 2,918 |  |  |  |  | $ | 10,028 |
Net income | $ | (2,377) |  |  | $ | 71 |  |  | $ | (806) |  |  | $ | (3,112) |
Earnings per basic common share | $ | (0.24) |  |  |  |  |  |  | $ | (0.36) |
Earnings per basic diluted share | $ | (0.24) |  |  |  |  |  |  | $ | (0.36) |
| As Reported |  | Adjustments |  | Proforma
| ALT5 Sigma Corporation Unaudited 39 weeks ended September 30, 2023 |  | ALT5 Subsidiary Unaudited 39 weeks ended September 30, 2023 |  | Adjustments(1) |  | ALT5 Sigma Corporation for the 39 weeks ended September 30, 2023
Net revenue | $ | — |  |  | $ | 4,912 |  |  |  |  | $ | 4,912 |
Net income | $ | 9,993 |  |  | $ | 2,345 |  |  | $ | (1,611) |  |  | $ | 10,727 |
Earnings per basic common share | $ | 2.71 |  |  |  |  |  |  | $ | 2.91 |
Earnings per basic diluted share | $ | 2.71 |  |  |  |  |  |  | $ | 2.91 |
(1)Adjustments are related to adjustments made for the following: •Amortization expense of definite-lived intangible assets has been adjusted based on the preliminary fair value at the acquisition date. Soin Pharmaceuticals Effective January 24, 2024, the Company, Amol Soin (“Dr. Soin”), and Soin Therapeutics LLC, a wholly-owned subsidiary of the Company that was had acquired from Dr. Soin, entered into an amendment (the “Soin Amendment”) to the parties’ Agreement and Plan of Merger that was dated as of December 28, 2022 (the “Soin Agreement”). With reference to the Soin Agreement, the parties to the Soin Amendment agreed that the $3.0 million convertible tranche (the first of the three original conversion tranches under the Soin Agreement) would be payable to Dr. Soin in cash rather than through his conversion of shares of the Series S Convertible Preferred Stock (the “Soin Preferred”) that constituted the consideration under the Soin Agreement. We tendered the first $100,000 amended tranche cash payment to Dr. Soin in March 2024; the second amended tranche cash payment to Dr. Soin, also in the amount of $100,000, is due on July 1, 2024; and the third amended tranche cash payment to Dr. Soin, in the amount of $2.8 million, is due on December 31, 2024. During the pendency of the amended cash tranche period, Dr. Soin agreed that he would not convert any of his shares of Soin Preferred. After we have tendered the second and third amended tranche cash payments to Dr. Soin, his conversion rights for the second and third original conversion tranches will remain convertible under the original provisions of the Soin Agreement and the related Certificate of Designation for the Soin Preferred. If we do not tender the second and third amended tranche cash payments to Dr. Soin, we agreed that we will transfer to him the membership interests of Soin Therapeutics LLC, and he will transfer to us the shares of Soin Preferred for cancellation. In connection with the Soin Amendment, the Company reclassified the $3.0 million convertible tranche, originally valued at approximately $2.7 million on our balance sheet, from mezzanine equity to current liabilities, and reclassified the $10.0 million convertible tranche, originally valued at approximately $8.0 million on our balance sheet, to permanent equity. As of September 28, 2024, the outstanding balance in mezzanine equity relates to the $17.0 million convertible tranche originally valued at approximately $3.9 million.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent + Details
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