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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

For the quarterly period ended July 2, 2022

or

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. ☒ Yes  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). ☒ Yes  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. 

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

As of August 11, 2022, there were 3,150,230 outstanding shares of the registrant’s common stock, with a par value of $0.001.

 


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 July 2, 2022 and January 1, 2022

3

 

 

 

 

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the 13 weeks and 26 weeks ended July 2, 2022 and July 3, 2021

4

 

 

 

 

Unaudited Condensed Consolidated Statements of Cash Flows for the 26 weeks ended July 2, 2022 and July 3, 2021

5

 

 

 

 

Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the 13 weeks and 26 weeks ended July 2, 2022 and July 3, 2021

6

 

 

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

7

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

29

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

36

 

 

 

Item 4.

Controls and Procedures

36

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

38

 

 

 

Item 1A.

Risk Factors

38

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

38

 

 

 

Item 3.

Defaults Upon Senior Securities

38

 

 

 

Item 4.

Mine Safety Disclosures

38

 

 

 

Item 5

Other Information

39

 

 

 

Item 6.

Exhibits

40

 

 

 

SIGNATURES

41

 

2


 

PART I. FINANCIAL INFORMATION

 

ITEM 1. Condensed Consolidated Financial Statements

 

JANONE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per-share amounts)

 

 

 

July 2,
2022

 

 

January 1,
2022

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,181

 

 

$

705

 

Trade and other receivables, net

 

 

4,273

 

 

 

4,220

 

Income taxes receivable

 

 

12

 

 

 

 

Inventories

 

 

494

 

 

 

1,209

 

Prepaid expenses and other current assets

 

 

869

 

 

 

1,423

 

Total current assets

 

 

6,829

 

 

 

7,557

 

Property and equipment, net

 

 

2,676

 

 

 

2,113

 

Right to use asset - operating leases

 

 

4,268

 

 

 

3,671

 

Intangible assets, net

 

 

345

 

 

 

268

 

Note receivable, net

 

 

11,277

 

 

 

 

Marketable securities

 

 

570

 

 

 

 

Deposits and other assets

 

 

1,554

 

 

 

1,556

 

Total assets

 

$

27,519

 

 

$

15,165

 

Liabilities and Stockholders' Equity (Deficit)

 

 

Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

5,839

 

 

$

5,266

 

Accrued liabilities - other

 

 

4,963

 

 

 

5,232

 

Accrued liability - California Sales Taxes

 

 

6,140

 

 

 

6,022

 

Lease obligation shortterm - operating leases

 

 

1,405

 

 

 

1,304

 

Shortterm debt

 

 

 

 

 

288

 

Current portion of notes payable

 

 

315

 

 

 

261

 

Current portion of related party note payable

 

 

223

 

 

 

1,000

 

Total current liabilities

 

 

18,885

 

 

 

19,373

 

Lease obligation long term - operating leases

 

 

2,964

 

 

 

2,470

 

Longterm portion of notes payable

 

 

1,509

 

 

 

1,318

 

Long-term portion related party note payable

 

 

724

 

 

 

 

Other noncurrent liabilities

 

 

219

 

 

 

680

 

Total liabilities

 

 

24,301

 

 

 

23,841

 

Commitments and contingencies (Note 15)

 

 

 

 

 

 

Stockholders' equity (deficit):

 

 

 

 

 

 

Preferred stock, series A - par value $0.001 per share 2,000,000 authorized,
   
222,588 and 238,729 shares issued and outstanding at July 2, 2022 and
   January 1, 2022, respectively

 

 

 

 

 

 

Common stock, par value $0.001 per share, 10,000,000 shares authorized,
   
3,150,230 and 2,827,410 shares issued and outstanding at July 2, 2022
   and January 1, 2022, respectively

 

 

2

 

 

 

2

 

Additional paid-in capital

 

 

45,747

 

 

 

45,743

 

Accumulated deficit

 

 

(41,914

)

 

 

(53,804

)

Accumulated other comprehensive loss

 

 

(617

)

 

 

(617

)

Total stockholders' equity (deficit)

 

 

3,218

 

 

 

(8,676

)

Total liabilities and stockholders' equity (deficit)

 

$

27,519

 

 

$

15,165

 

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

3


 

JANONE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(Dollars in thousands, except per-share)

 

 

 

For the Thirteen Weeks Ended

 

 

For the Twenty Six Weeks Ended

 

 

 

July 2,
2022

 

 

July 3,
2021

 

 

July 2,
2022

 

 

July 3,
2021

 

Revenues

 

$

10,538

 

 

$

8,606

 

 

$

19,862

 

 

$

17,278

 

Cost of revenues

 

 

8,889

 

 

 

6,863

 

 

 

16,360

 

 

 

14,114

 

Gross profit

 

 

1,649

 

 

 

1,743

 

 

 

3,502

 

 

 

3,164

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

2,908

 

 

 

4,595

 

 

 

5,853

 

 

 

8,125

 

Gain on sale of GeoTraq

 

 

(12,091

)

 

 

 

 

 

(12,091

)

 

 

 

Operating income (loss)

 

 

10,832

 

 

 

(2,852

)

 

 

9,740

 

 

 

(4,961

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(98

)

 

 

(125

)

 

 

(290

)

 

 

(198

)

Gain on Payroll Protection Program loan forgiveness

 

 

 

 

 

 

 

 

 

 

 

1,872

 

Gain (loss) on litigation settlement, net

 

 

 

 

 

(1,950

)

 

 

1,835

 

 

 

(1,950

)

Gain on settlement of vendor advance payments

 

 

 

 

 

131

 

 

 

 

 

 

941

 

Gain on reversal of contingency loss

 

 

 

 

 

 

 

 

637

 

 

 

 

Unrealized loss on marketable securities

 

 

(376

)

 

 

 

 

 

(376

)

 

 

 

Other income, net

 

 

333

 

 

 

22

 

 

 

359

 

 

 

22

 

Total other income (expense), net

 

 

(141

)

 

 

(1,922

)

 

 

2,165

 

 

 

687

 

Income (loss) from operations before provision for income taxes

 

 

10,691

 

 

 

(4,774

)

 

 

11,905

 

 

 

(4,274

)

Provision (benefit) for income taxes

 

 

4

 

 

 

205

 

 

 

7

 

 

 

203

 

Net income (loss)

 

$

10,687

 

 

$

(4,979

)

 

$

11,898

 

 

$

(4,477

)

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic income per share

 

$

3.39

 

 

$

(2.07

)

 

$

3.78

 

 

$

(1.94

)

Diluted income per share

 

$

3.06

 

 

$

(2.07

)

 

$

3.40

 

 

$

(1.94

)

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

3,150,230

 

 

 

2,405,410

 

 

 

3,150,230

 

 

 

2,312,024

 

Diluted

 

 

3,496,250

 

 

 

2,405,410

 

 

 

3,496,250

 

 

 

2,312,024

 

Net income (loss)

 

$

10,687

 

 

$

(4,979

)

 

$

11,898

 

 

$

(4,477

)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Effect of foreign currency translation adjustments

 

 

41

 

 

 

 

 

 

 

 

 

(42

)

Total other comprehensive income (loss), net of tax

 

 

41

 

 

 

 

 

 

 

 

 

(42

)

Comprehensive income (loss)

 

$

10,728

 

 

$

(4,979

)

 

$

11,898

 

 

$

(4,519

)

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

4


 

JANONE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

 

 

 

For the Twenty Six Weeks Ended

 

 

 

July 2, 2022

 

 

July 3, 2021

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income (loss)

 

$

11,898

 

 

$

(4,477

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating
   activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

270

 

 

 

2,090

 

Amortization of debt issuance costs

 

 

7

 

 

 

 

Stock based compensation expense

 

 

4

 

 

 

180

 

Accretion of note receivable discount

 

 

(27

)

 

 

 

Gain on legal settlement

 

 

(115

)

 

 

 

Gain on Payroll Protection Program loan forgiveness

 

 

 

 

 

(1,872

)

Gain on settlement of vendor advance payments

 

 

 

 

 

(941

)

Gain on reversal of contingent liability

 

 

(637

)

 

 

 

Gain on sale of GeoTraq

 

 

(12,091

)

 

 

 

Unrealized loss on marketable securites

 

 

376

 

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(53

)

 

 

(204

)

Income taxes receivable

 

 

(12

)

 

 

173

 

Prepaid expenses and other current assets

 

 

554

 

 

 

110

 

Inventories

 

 

610

 

 

 

303

 

Right of use assets

 

 

(597

)

 

 

(681

)

Lease liability

 

 

595

 

 

 

650

 

Accounts payable and accrued expenses

 

 

713

 

 

 

2,485

 

Deposits and other Assets

 

 

(6

)

 

 

(123

)

Net cash provided by (used in) operating activities

 

 

1,489

 

 

 

(2,307

)

INVESTING ACTIVITIES:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(721

)

 

 

(1,458

)

Purchases of intangibles

 

 

(189

)

 

 

(65

)

Net cash used in investing activities

 

 

(910

)

 

 

(1,523

)

FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from equity financing, net

 

 

 

 

 

5,544

 

Proceeds from stock option exercise

 

 

 

 

 

27

 

Proceeds from notes payable

 

 

366

 

 

 

1,835

 

Payments on related party notes payable

 

 

(53

)

 

 

 

Payments on notes payable

 

 

(128

)

 

 

(59

)

Payments on short-term notes payable

 

 

(288

)

 

 

(144

)

Net cash provided by (used in) financing activities

 

 

(103

)

 

 

7,203

 

Effect of changes in exchange rate on cash and cash equivalents

 

 

 

 

 

(42

)

INCREASE IN CASH AND CASH EQUIVALENTS

 

 

476

 

 

 

3,331

 

CASH AND CASH EQUIVALENTS, beginning of period

 

 

705

 

 

 

379

 

CASH AND CASH EQUIVALENTS, end of period

 

$

1,181

 

 

$

3,710

 

Supplemental cash flow disclosures:

 

 

 

 

 

 

Interest paid

 

$

120

 

 

$

84

 

Income taxes paid

 

 

54

 

 

 

28

 

Right to use asset - operating leases capitalized

 

 

1,451

 

 

 

1,244

 

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

5


 

JANONE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)

(Dollars in thousands)

 

 

 

Series A Preferred

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

 

Equity (Deficit)

 

Balance, January 1, 2022

 

 

238,729

 

 

$

 

 

 

2,827,410

 

 

$

2

 

 

$

45,743

 

 

$

(53,804

)

 

$

(617

)

 

$

(8,676

)

Share based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

4

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8

)

 

 

(41

)

 

 

(49

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,211

 

 

 

 

 

 

1,211

 

Balance, April 2, 2022

 

 

238,729

 

 

 

 

 

 

2,827,410

 

 

 

2

 

 

 

45,747

 

 

 

(52,601

)

 

 

(658

)

 

 

(7,510

)

Series A-1 preferred converted

 

 

(16,141

)

 

 

 

 

 

322,820

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

41

 

 

 

41

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,687

 

 

 

 

 

 

10,687

 

Balance, July 2, 2022

 

 

222,588

 

 

$

 

 

 

3,150,230

 

 

$

2

 

 

$

45,747

 

 

$

(41,914

)

 

$

(617

)

 

$

3,218

 

 

 

 

Series A Preferred

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

 

Equity

 

Balance, January 1, 2021

 

 

259,729

 

 

$

 

 

 

1,829,982

 

 

$

2

 

 

$

39,869

 

 

$

(36,917

)

 

$

(588

)

 

$

2,366

 

Shares issued

 

 

 

 

 

 

 

 

571,428

 

 

 

 

 

 

5,544

 

 

 

 

 

 

 

 

 

5,544

 

Share based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

109

 

 

 

 

 

 

 

 

 

109

 

Stock option exercise