AI Financial said in a new filing with the U.S. Securities and Exchange Commission that the going-concern issues it flagged earlier have been “substantially mitigated.” The Nasdaq-listed company had warned investors in May that it might not be able to continue as a going concern over the next 12 months. Its latest update came after large losses tied to WLFI tokens linked to World Liberty Financial.
WLFI position has dropped sharply from its original value
The transaction dates back to August, when the company was still operating as Alt5 Sigma. It entered a $1.5 billion deal with World Liberty Financial and acquired 7.3 billion WLFI tokens. The company had expected the tokens to appreciate after the purchase. Instead, WLFI was trading about 70% below Alt5’s purchase price as of Wednesday morning, according to Coinbase data. In a recent filing, AI Financial reported a $348 million first-quarter loss on its crypto assets.
By Tuesday evening, the company valued its WLFI holdings at about $380 million, down from an initial value of roughly $1.4 billion. AI Financial also said it cannot currently sell those tokens because they are subject to lock-up agreements. The restrictions vary by tranche and depend on how the tokens were acquired. Under the current terms, the earliest sales cannot take place before mid-August. Chief executive Tony Isaac said the company has no current plans to sell the tokens.
Part of the holding may be used in lending transactions
While the full position cannot be sold yet, AI Financial said 3.2 billion WLFI tokens are available for loan-related use. The company said those tokens may be posted as collateral or used in similar transactions. It valued that lendable portion of the position at about $180 million.
The figure was disclosed in Wednesday’s securities filing. The company said its business outlook had improved, even though WLFI remained below its purchase level. The filing did not assign any operating role at AI Financial to the Trump brothers, and a spokeswoman had previously said they have no visibility into AI Financial and no involvement in its operations.
Stock remains under $1 as Nasdaq compliance deadline approaches
That leaves a separate pressure point in place. Nasdaq requires listed companies to keep their share price above $1, yet AI Financial opened at just $0.65 on Wednesday after falling 92% since the WLFI deal. Based on the timeline described in the report, the company is roughly two weeks away from its compliance deadline. If it fails to regain compliance, Nasdaq could move to delist the stock.
In early Wednesday trading, AI Financial shares rose 3 cents after the filing was released. Even with the company softening its earlier going-concern warning, the disclosed numbers show that the drop in WLFI’s value, the token lock-ups, and the Nasdaq listing requirement remain central to its near-term situation.