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Debentures | 3 Months Ended
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Mar. 29, 2025
Debt Disclosure [Abstract] |
Debentures | Debentures Debentures outstanding as of March 29, 2025 and December 28, 2024 consisted for the following (in $000’s):
| March 29, 2025 |  | December 28, 2024
Interest rate of 12%, maturity date of June 30, 2025 | $ | 563 |  |  | $ | 563 |
Total debentures | $ | 563 |  |  | $ | 563 |
ALT5 Subsidiary issued seven debentures over a period from October 2018 through September 2019. The debentures bear interest at 12% per annum and mature as of June 30, 2025. Debt Long-term debt as of March 29, 2025 and December 28, 2024 consisted of the following (in $000’s):
| March 29, 2025 |  | December 28, 2024
Legacy subsidiary fixed deposits | $ | 5,503 |  |  | $ | 4,247 |
Legacy subsidiary loan | 3,334 |  |  | 3,782 |
Unaffiliated third-party | 3,916 |  |  | 3,508 |
Other | — |  |  | 33 |
Total notes payable, related parties | 12,753 |  |  | 11,570 |
Less current portion | (3,334) |  |  | — |
Total long-term notes payable, related parties | $ | 9,419 |  |  | $ | 11,570 |
Legacy Subsidiary Fixed Deposits ALT5 Subsidiary entered into several Corporate Fixed Deposit Agreements with otherwise unaffiliated third-parties, pursuant to which the Company became obligated for an aggregate of $5.5 million, as set forth in the respective agreements. Each obligation bears interest at a rate of 13% or 15% per annum, and has a maturity date range of April 2026 to March 2027. Several of these unaffiliated third-parties agreed to convert their respective investments into Future Equity Agreements for shares of the Company’s subsidiary, Alyea Therapeutic and, consequently, approximately $125,000 of these deposits were reclassified as non-controlling interest. As of March 29, 2025 and December 28, 2024, the outstanding aggregate obligations totaled approximately $5.5 million and $4.2 million, respectively. Legacy Subsidiary Loan On August 10, 2023, ALT5 Subsidiary entered into an extension agreement for a Bitcoin promissory note with an otherwise unaffiliated third-party. The Bitcoin promissory note is denominated in Bitcoin and, thus, is adjusted to its fair value each period. Pursuant to the terms of an extension agreement, the maturity date is August 2025. The promissory note bears interest at 15% per annum. As of March 29, 2025 and December 28, 2024, the outstanding balance of the note was approximately $3.3 million and $3.8 million, respectively. Unaffiliated Third-Party Loans ICG Note On February 7, 2024, the Company amended its outstanding related party promissory obligations (the “ICG Note”) in favor of Isaac Capital Group LLC (“ICG”) to add a convertibility provision. In accordance with Nasdaq Rules, the per-share conversion price was set at $0.61, subject to standard adjustments for (i) stock dividends and splits, (ii) subsequent rights offerings, and (iii) pro rata distributions. The Company’s board of directors provided its approvals of the amendments on February 7, 2024. On March 6, 2024, ICG entered into a Note Purchase Agreement with an otherwise unaffiliated third party, under which the third party acquired the ICG Note. The terms and conditions of the ICG Note were not modified in connection with its acquisition by the third party. The principal amount of the ICG Note on the date of acquisition was approximately $1.2 million. During the year ended December 28, 2024, the third party converted $548,900 of the Company’s obligations under the ICG Note into 900,000 shares of the Company’s common stock. As of March 29, 2025 and December 28, 2024, the amount outstanding on the ICG Note was approximately $0.70 million and $0.7 million, respectively. Live Note On February 7, 2024, the Company amended its outstanding related party promissory obligations (the “Live Note”) in favor of Live Ventures Incorporated (“Live”) to add a convertibility provision. In accordance with Nasdaq Rules, the per-share conversion price for each obligation, as amended, was set at $0.61, subject to standard adjustments for (i) stock dividends and splits, (ii) subsequent rights offerings, and (iii) pro rata distributions. The Company’s board of directors provided its final approvals of the amendments on February 7, 2024. On March 6, 2024, Live entered into a Note Purchase Agreement with another otherwise unaffiliated third party, under which the third party acquired the Live Note. The terms and conditions of the acquired Live Note were not modified in connection with its acquisition by the third party. The principal amount of the Live Note on the date of acquisition was approximately $1.0 million. During the year ended December 28, 2024, the third party converted $243,900 of the Company’s obligations under the Live Note into 400,000 shares of the Company’s common stock. As of March 29, 2025 and December 28, 2024, the amount outstanding on the Live Note was approximately $0.80 million and $0.8 million. Big/Small Debentures On August 20, 2024, the Company entered into three Purchase Agreements with three otherwise unaffiliated third-party investors (the “Investors”), pursuant to which (1) one Investor agreed to purchase a unit (the “Unit”), consisting of (i) a non-convertible debenture in the principal amount of up to approximately $1.8 million (the “Big Debenture”), and (ii) a warrant (the “Big Warrant”) for the purchase of up to 400,000 shares of the Company’s Common Stock and (2) the two other Investors each agreed to purchase a Unit, consisting of (i) a non-convertible debenture in the principal amount of up to $404,454 (the “Small Debenture”, and, together with the Big Debenture, the “Debentures”) and (ii) a warrant (the “Small Warrant”, and, together with the Big Warrant, the “Warrants”) for the purchase of up 90,909 shares of Common Stock. The Debentures are unsecured and subordinated to any existing or future debt. The Debentures bear interest at a rate of (i) 1% per month from and after August 20, 2024 (“Original Issue Date”) through and including October 31, 2024, (ii) 3% per month from and after November 1, 2024 through and including January 29, 2025, and (iii) 4% per month from and after January 30, 2025 through and including the date of repayment. The Big Debenture was issued with an original issue discount (an “OID”) initially of $171,000, which OID can be expanded with up to two potential additions, the first in the amount of $171,000 and, thereafter, in the amount of $342,000, which OIDs will increase the principal amount owing on the Big Debenture. With the original OID, the initial principal amount owing under the Big Debenture is approximately $1.3 million; if, expanded, the principal amount would increase to approximately $1.4 million and, thereafter, potentially to approximately $1.8 million. The first potential increase in the Big Debenture OID would occur if the initial principal amount and interest accrued thereon is not paid in full on or before October 31, 2024. The second potential increase in the OID would occur if the initial principal amount (including the first potential increase in the OID) and interest accrued thereon is not paid in full on or before January 29, 2025. The Small Debentures were issued with an OID initially of $38,863, which OID can be expanded with up to two potential additions, the first in the amount of $38,863 and, thereafter, in the amount of $77,728, which OIDs will increase the principal amount owing on the Small Debentures. With the original OID, the initial principal amount owing under a Small Debenture is $288,864; if, expanded, the principal amount would increase to $327,726 and, thereafter, potentially to $404,454. The first potential increase in the Small Debenture OID would occur if the initial principal amount and interest accrued thereon is not paid in full on or before October 31, 2024. The second potential increase in the OID would occur if the initial principal amount (including the first potential increase in the OID) and interest accrued thereon is not paid in full on or before January 29, 2025. As of November 1, 2024, the first of the two additional OIDs was effective. The final maturity date for each of the Debentures is April 28, 2025. The Big Warrant is exercisable, at an exercise price of $1.71 per share, as follows: (i) 100,000 shares of Common Stock as of Original Issue Date, (ii) contingently for an additional 100,000 shares of Common Stock as of October 31, 2024, if, as of such date, the Company has not repaid in full its obligations under the Big Debenture, and (iii) contingently for an additional 200,000 shares of Common Stock as of January 29, 2025, if, as of such date, the Company has not repaid in full its obligations under the Big Debenture. The Small Warrant is exercisable, at an exercise price of $1.71 per share, as follows: (i) 22,727 shares of Common Stock as of Original Issue Date, (ii) contingently for an additional 22,727 shares of Common Stock as of October 31, 2024, if, as of such date, the Company has not repaid in full its obligations under the Small Debenture, and (iii) 45,455 shares of Common Stock as of January 29, 2025, if, as of such date, the Company has not repaid in full its obligations under the Small Debenture. As of November 1, 2024, the contingent second tranche of the Warrants vested. Each Investor is required to exercise the initial tranche of each Warrant within 15 days of the Original Issue Date. Upon the vesting of each contingent tranche of a Warrant vest, each Investor shall exercise such vested, contingent tranche within 15 days of the vesting of such contingent tranche. If the Company consummates any equity or debt financing before satisfying in full its obligations under the Debentures, then 50% of every net dollar received by the Company from any such financing transaction shall be paid by the Company to the holders of the Debentures, on a pro rata basis, as a mandatory pre-payment thereof. In the event the Company has repaid all sums owing under a Debenture to the Investor, except for an amount equal to any non-conditional OID, the Company has the right, not the obligation, to exercise the vested portion of the Warrant held by the Debenture holder through a set-off of any or all such unpaid OID, on a dollar-for-dollar basis. The Warrants also feature a “cashless” exercise provision. In lieu of making the cash payment otherwise contemplated to be made to the Company upon exercise of a Warrant in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of shares of Common Stock determined according to a formula set forth in the Warrant. During the quarter ended March 29, 2025, one of the two non-affiliated Investors exercised the remainder of the Small Warrant for a total of 45,455 shares (see Note 14). During the fourth quarter of the year ended December 28, 2024, the non-affiliated Investor exercised the Big Warrant for a total of 200,000 shares of the Company’s common stock, and the other two non-affiliated Investors exercised the Small Warrant for a total of 90,908 shares. Additionally, during the fourth quarter of the year ended December 28, 2024, these unaffiliated third-parties agreed to convert a portion their respective investment into Future Equity Agreements of the Company’s subsidiary, Alyea Therapeutics and, consequently, approximately $1.3 million was reclassified as non-controlling interest. During the 13 weeks ended March 29, 2025, the Company paid approximately $0.2 million, in principal and accrued interest, to one of the two non-affiliated Investors in settlement of its debt. As of March 29, 2025 and December 28, 2024, the outstanding balance due on the debentures was approximately $0.3 million and $0.5 million, respectively, consisting of principal and accrued interest. Corporate Fixed Deposit Agreement On September 19, 2024, ALT5 Subsidiary and an investor entered into a 12-month Corporate Fixed Deposit Agreement, pursuant to which ALT5 Subsidiary borrowed $1.5 million at an interest rate of 12% per annum, payable monthly, calculated on the then-unpaid principal amount. Upon maturity, ALT5 Subsidiary is obligated to repay the principal amount in full and any accrued and unpaid interest. The principal may be repaid in full, but not in part, with a pre-payment penalty equivalent to three month’s of interest. As of March 29, 2025 and December 28, 2024, the outstanding balance was approximately $1.6 million and $1.5 million, respectively, consisting of principal and accrued interest. Personal Fixed Deposit Agreement On February 1, 2025, ALT5 Subsidiary and an investor entered into a 24-month Personal Fixed Deposit Agreement, pursuant to which ALT5 Subsidiary borrowed $0.5 million at an interest rate of 13% per annum, payable monthly, calculated on the then-unpaid principal amount. Upon maturity, ALT5 Subsidiary is obligated to repay the principal amount in full and any accrued and unpaid interest. The principal may be repaid in full, but not in part, with a pre-payment penalty equivalent to three month’s of interest. As of March 29, 2025, the outstanding balance was approximately $0.5 million.

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