Note 1: Background

The accompanying consolidated financial statements include the accounts of AI Financial Corporation, a Nevada corporation, and its subsidiaries (collectively, the “Company” or “AIFC”). Effective April 28, 2026, the Company changed its name to “AI Financial Corporation” from “Alt5 Sigma Corporation”. The Company also changed its Nasdaq common stock symbol to “AIFC” from “ALTS.” Previously, effective July 15, 2024, the Company had changed its corporate name to “ALT5 Sigma Corporation” from “JanOne Inc.” and also changed its Nasdaq common stock ticker symbol to “ALTS” from “JAN”. In each instance, the corporate name changes were effected through a parent/subsidiary short-form merger of Company’s wholly-owned Nevada subsidiary formed solely for the purpose of effectuating the name change, whereby that “name change subsidiary” subsidiary merged with and into the Company, with the Company being the surviving entity, albeit with its new name.

The Company had three operating segments – Fintech, Biotechnology, and Corporate and Other. We have previously announced our intention to capitalize Alyea Therapeutics Corporation (“Alyea”) as a subsidiary with certain of our biotechnology assets, acquire an additional biotechnology asset, and then engage in a financing of that subsidiary. In connection with that potential series of transactions, the accounts for the Biotechnology segment have been presented as discontinued operations in the accompanying consolidated financial statements.

Fintech

On May 15, 2024, the Company acquired ALT5 Sigma, Inc., a Delaware corporation and its Canadian operating subsidiaries (collectively, (“ALT5 Subsidiary”). ALT5 Subsidiary 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 (see Note 3).

On May 9, 2025, the Company acquired Fortress II Holdings Ltd. d/b/a Mswipe. Mswipe is a next-generation payment solutions provider offering multi-currency, fiat payment card services, along with crypto-enabled capabilities through its existing integration with the ALT5 Subsidiary platform. Its suite of physical and virtual cards, available on both the Visa^® and Mastercard® networks, allows users to seamlessly spend traditional and digital currencies worldwide (see Note 3).

Biotechnology

During September 2019, the Company, through its biotechnology segment, broadened its business perspectives to expand it’s pharmaceutical operations and focus on finding treatments for conditions that cause severe pain and bringing to market drugs with non-addictive pain-relieving properties. Effective December 28, 2022, the Company acquired Soin Therapeutics LLC, a Delaware limited liability company (“STLLC”), and its product, a patent-pending, novel formulation of low-dose naltrexone, (“JAN123”). The product is being developed for the treatment of Complex Regional Pain Syndrome (CRPS), an indication that causes severe, chronic pain generally affecting the arms or legs. At present, there are no truly effective treatments for CRPS. Because of the relatively small number of patients afflicted with CRPS, the FDA has granted Orphan Drug Designation for any product approved for treatment of CRPS. This designation will provide the Company with tax credits for its clinical trials, exemption of user fees, and the potential of seven years of market exclusivity following approval. In addition, development of orphan drugs currently also involves smaller trials and quicker times to approval, given the limited number of patients available to study. However, there can be no assurance that the product will receive FDA approval or that it will result in material sales. In that regard, we have previously announced our intention to capitalize Alyea as 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. In connection with that potential series of transactions, accounts for the Biotechnology segment have been presented as discontinued operations in the accompanying consolidated financial statements (see Note 4).

Corporate and Other

Our Corporate and Other segment consists of WLFI assets, including any additions, redemptions, or mark-to-market changes in value, which are recorded within the Company’s Corporate and Other segment.

The WLFI treasury program was initiated on August 12, 2025, with purchases executed in two tranches at $0.20 per token:

As of March 28, 2026, all 7,283,585,650 WLFI tokens held by AI Financial Corporation are subject to contractual lock-up provisions, with 3,533,585,650 tokens acquired under the Token Purchase Agreement being non-transferable for a 12-month lock-up period (other than limited permitted uses for collateral, staking, or lending that do not involve any sale or permanent transfer) and 3,750,000,000 tokens acquired under the Securities Purchase Agreement remaining locked for 12 months from the Closing Date and only becoming eligible for release upon satisfaction of specified shareholder approval, charter amendment, and resale registration statement effectiveness conditions, with no waivers or early releases granted other than the limited uses described above.

In connection with the WLFI treasury program, the Company entered into lock-up agreements restricting certain equity issuances. Pursuant to the Purchase Agreements, the Company agreed not to issue, or enter into any agreement to issue, shares of Common Stock or Common Stock equivalents, or file any registration statement or amendment thereto, for a period of 30 days following the closing date of the Offerings, subject to customary exceptions including issuances under the ATM Sales Agreement.

In addition, each of the Company’s directors and executive officers is subject to a lock-up agreement prohibiting the sale, pledge, or other transfer or disposition of 50% of their shares of Common Stock, or securities convertible into or exchangeable for Common Stock, for a period of 90 days following the closing date, with the remaining 50% subject to the same restrictions until the later of 90 days following the closing date or the date Stockholder Approval was obtained. Transfers for bona fide estate or tax planning purposes are permitted, provided the transferee agrees to be bound by the same lock-up terms.

WLFI is considered a related party to the Company by virtue of the following relationships. Zachary Witkoff, the Chairman of the Company’s Board of Directors, is a Co-Founder and Chief Executive Officer of WLFI. Zachary Folkman, a member of the Company’s Board of Directors, is also a Co-Founder of WLFI. In addition, WLFI is the record owner of 1,000,000 shares of the Company’s Common Stock and holds pre-funded warrants to purchase up to 99,000,000 additional shares of Common Stock, as well as warrants to purchase up to 20,000,000 shares of Common Stock at exercise prices ranging from $7.50 to $9.75 per share, each acquired in connection with the WLFI treasury program. As a result of these relationships, WLFI is deemed a related party under ASC 850, Related Party Disclosures, and all transactions between the Company and WLFI, including the Token Purchase Agreements pursuant to which the Company acquired its WLFI token holdings and the Master Loan and Security Agreement entered into in January 2026, have been reviewed and approved by the Audit Committee of the Board of Directors in accordance with the Company’s related party transaction policy

All acquisitions were executed through on-chain transactions and direct Token Purchase Agreements with the WLFI Foundation. The Company did not hold any WLFI tokens prior to August 12, 2025.

Our Corporate and Other segment consists of certain corporate general and administrative costs.

The Company reports on a 52- or 53-week fiscal year. The Company’s 2025 fiscal year (“2025”) ended on December 27, 2025, and the current fiscal year (“2026”) will end on December 26, 2026.

Liquidity and Going Concern Considerations

The Company has incurred recurring losses from operations, including a net loss from continuing operations of approximately $271.3 million for the quarter ended March 28, 2026, and a net loss from continuing operations of approximately $8.3 million for the fiscal year ended December 27, 2025. As of March 28, 2026, the Company had a working capital deficit of approximately $5.5 million, reflecting total current liabilities of $39.1 million compared to total current assets of $32.2 million. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued.

In evaluating its ability to meet its obligations, management has considered the following:

On January 29, 2026, the Company, through its indirect wholly-owned subsidiary ALT5 Digital Holdings, Inc., drew down $15.0 million under the Master Loan and Security Agreement with WLFI, receiving net proceeds of approximately $14.2 million after prepayment of interest and reimbursement of lender expenses. The Company intends to use these proceeds to fund a share repurchase program as approved by our Board of Directors (our “Board”), to acquire additional WLFI tokens, and for general corporate purposes.

In addition, management believes that the Company’s holdings of approximately 7.3 billion WLFI tokens, carried at a fair value of approximately $703.4 million as of March 28, 2026, represent a significant financial resource available to support the Company’s liquidity position. The Company may, subject to market conditions and its stated long-term treasury policy, redeem or monetize a portion of its token holdings to fund operations, satisfy obligations, or pursue strategic initiatives. The Company’s treasury policy permits sales of WLFI tokens in connection with liquidity requirements or material portfolio rebalancing events.

Notwithstanding the foregoing, the WLFI tokens are subject to significant market price risk, and there can be no assurance that the tokens will retain their current value or that the Company will be able to monetize them on favorable terms or at all. The Company’s ability to continue as a going concern is dependent upon its ability to manage its liquidity position, including through the sources described above, achieve revenue growth in its Fintech segment, and, if necessary, raise additional capital through debt or equity financing. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.