jan-20230701

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended July 1, 2023

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File No. 0-19621

JANONE INC.

(Exact name of registrant as specified in its charter)


Nevada (State or other jurisdiction of incorporation or organization)						41-1454591 (I.R.S. Employer Identification No.)

325 E. Warm Springs Road, Suite 102 Las Vegas, Nevada (Address of principal executive offices)						89119 (Zip Code)

702-997-5968

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

JAN

The Nasdaq Stock Market LLC

(The Nasdaq Capital Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes x No

As of August 11, 2023, there were 3,768,878 outstanding shares of the registrant’s common stock, with a par value of $0.001.

Table of Contents

JANONE INC.

INDEX TO FORM 10-Q


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements	3

	Unaudited Condensed Consolidated Balance Sheets as of Jul y 1, 2023 and December 31, 2022	3

	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income for the 13 and 26 weeks ended July 1, 2023 and July 2, 2022	4

	Unaudited Condensed Consolidated Statements of Cash Flows for the 26 weeks ended July 1, 2023 and July 2, 2022	5

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the 13 and 26 weeks ended July 1, 2023 and July 2, 2022	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	31

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	32

Item 4.	Mine Safety Disclosures	32

Item 5	Other Information	32

Item 6.	Exhibits	33

SIGNATURES		34

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. Condensed Consolidated Financial Statements

JANONE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per-share amounts)


	July 1, 2023		December 31, 2022
	(Unaudited)
Assets
Cash and cash equivalents	$	169	$	61
Trade and other receivables, net	15		106
Prepaid expenses and other current assets	102		394
Current assets from discontinued operations	—		8,612
Total current assets	286		9,173
Intangible assets - Soin, net	18,567		19,293
Other intangible assets, net	4		4
Note receivable - SPYR, net	9,377		8,974
Note receivable - VM7, net	5,718		—
Marketable securities	237		315
Deposits and other assets	17		18
Other assets from discontinued operations	—		8,979
Total assets	$	34,206	$	46,756
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable	$	2,402	$	2,276
Accrued liabilities - other	495		1,006
Short-term debt	—		274
Current liabilities from discontinued operations	—		20,382
Total current liabilities	2,897		23,938
Deferred income taxes, net	3,041		—
Other noncurrent liabilities	70		241
Noncurrent liabilities from discontinued operations	—		5,760
Total liabilities	6,008		29,939
Commitments and contingencies (Note 12)
Mezzanine equity
Convertible preferred stock, series S - par value $0.001 per share, 200,000 authorized, 100,000 and 100,000 shares issued and outstanding at July 1, 2023 and December 31, 2022, respectively	14,510		14,510
Stockholders' equity:
Preferred stock, series A-1 - par value $0.001 per share, 2,000,000 authorized, 209,706 and 222,588 shares issued and outstanding at July 1, 2023 and December 31, 2022, respectively	—		—
Common stock, par value $0.001 per share, 10,000,000 shares authorized, 3,768,878 and 2,827,410 shares issued and outstanding at July 1, 2023 and at December 31, 2022, respectively	3		2
Additional paid-in capital	46,299		45,748
Accumulated deficit	(32,614)		(42,822)
Accumulated other comprehensive loss	—		(621)
Total stockholders' equity	13,688		2,307
Total liabilities and stockholders' equity	$	34,206	$	46,756

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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JANONE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

(Dollars in thousands, except per-share)


	For the Thirteen Weeks Ended				For the Twenty-Six Weeks Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Revenues	$	—	$	—	$	—	$	—
Cost of revenues	—		—		—		—
Gross profit	—		—		—		—
Operating expenses:
Selling, general and administrative expenses	1,060		658		2,159		1,339
Operating loss	(1,060)		(658)		(2,159)		(1,339)
Other income (expense):
Interest income (expense), net	365		167		840		165
Gain on litigation settlement, net	—		—		—		1,950
Unrealized loss on marketable securities	—		(376)		(247)		(376)
Gain on reversal of contingency loss	—		—		—		637
Other income, net	757		640		739		1,355
Total other income, net	1,122		431		1,332		3,731
Income (loss) from continuing operations before provision for income taxes	62		(227)		(827)		2,392
Income tax benefit	(17)		—		(244)		—
Net income (loss) from continuing operations	79		(227)		(583)		2,392
Gain from discontinued operations	1		9,105		13,976		7,700
Income tax provision (benefit) for discontinued operations	(43)		4		3,186		7
Net income from discontinued operations	44		9,101		10,790		7,693
Net income	$	123	$	8,874	$	10,207	$	10,085
Net income (loss) per share:
Net income (loss) per share from continuing operations, basic	$	0.02	$	(0.07)	$	(0.17)	$	0.76
Net income (loss) per share from continuing operations, diluted	$	0.02	$	(0.06)	$	(0.17)	$	0.68
Net income per share from discontinued operations, basic	$	0.01	$	2.89	$	3.14	$	2.44
Net income per share from discontinued operations, diluted	$	0.01	$	2.60	$	3.14	$	2.20
Net income per share, basic	$	0.03	$	2.82	$	2.97	$	3.20
Net income per share, diluted	$	0.03	$	2.54	$	2.97	$	2.88
Weighted average common shares outstanding:
Basic	3,665,887		3,150,230		3,432,374		3,150,230
Diluted	3,665,887		3,496,250		3,432,374		3,496,250

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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JANONE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)


	For the Twenty-Six Weeks Ended
	July 1, 2023		July 2, 2022
OPERATING ACTIVITIES:
Net income (loss) from continuing operations	$	(583)	$	2,392
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	727		2

Stock based compensation expense	12		4
Accretion of note receivable discount	(518)		(64)
Gain on legal settlement	—		(115)
Unrealized loss on marketable securities	247		376
Gain on reversal of contingent liability	—		(637)

Changes in assets and liabilities:
Accounts receivable, net of acquisitions and dispositions	342		(753)
Income taxes receivable	—		(12)
Prepaid expenses and other current assets, net of dispositions	292		355
Inventories	—		(210)
Accounts payable and accrued expenses, net of dispositions	(529)		(108)
Other Assets	1		6
Operating cash flows provided by discontinued operations	2,320		253
Net cash provided by operating activities	2,311		1,489
INVESTING ACTIVITIES:
Purchases of property and equipment	—		(721)
Purchases of intangibles	—		(189)
Investing cash flows used in discontinued operations	(156)		—
Net cash used in investing activities	(156)		(910)
FINANCING ACTIVITIES:
Proceeds from equity financing, net	368		—



Payments on short-term notes payable	(274)		(288)
Financing cash flows from discontinued operations	(2,212)		185
Net cash used in financing activities	(2,118)		(103)
Effect of changes in exchange rate on cash and cash equivalents	17		—
INCREASE IN CASH AND CASH EQUIVALENTS	54		476
CASH AND CASH EQUIVALENTS, beginning of period	115		705
LESS CASH OF DISCONTINUED OPERATIONS, end of period	—		(233)
CASH AND CASH EQUIVALENTS, end of period	$	169	$	948
Supplemental cash flow disclosures:
Interest paid	$	118	$	120
Income taxes paid	—		54
Noncash recognition of new leases	—		1,451

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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JANONE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

(UNAUDITED)

(Dollars in thousands)


	Series A-1 Preferred			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Deficit		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance, December 31, 2022	222,588	$	—	3,150,230	$	2	$	45,748	$	(42,822)	$	(621)	$	2,307

SEC Form 10-Q filed by JanOne Inc.