UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Amendment No. 1
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended
or
Commission File No.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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(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. ☒
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). ☒
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 |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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).
As of November 11, 2022, there were
JANONE INC.
INDEX TO FORM 10-Q
EXPLANATORY NOTE
On April 17, 2023, the Company’s management and the Audit Committee of the Company’s Board of Directors (the “Audit Committee”) reached a determination that the Company’s previously issued unaudited consolidated financial statements and related disclosures for each of the quarterly periods ended July 2, 2022 and October 1, 2022, should no longer be relied upon because of a material misstatement contained in those two quarterly unaudited condensed consolidated financial statements. The Company’s management and the Audit Committee discussed the matters with Frazier & Deeter, LLC, the Company’s independent registered public accounting firm for the 2022 fiscal year, and with WSRP, LLC, the Company’s independent registered public accounting firm during the second and third quarters in the 2022 fiscal year and prior fiscal periods since 2019, and determined to restate the Company’s unaudited condensed consolidated financial statements for the second and third fiscal quarters ended July 2, 2022, and October 1, 2022.
In connection with the Company’s preparation of its unaudited condensed consolidated financial statements and related disclosures for its second quarter, the Company’s management and Audit Committee relied upon the report issued by a third-party valuation firm to determine the carrying value of the promissory note the Company had received from SPYR Technologies, Inc. (the “SPYR Note”), in connection with the Company’s sale of the assets of its GeoTraq, Inc. subsidiary to SPYR Technologies, Inc. in the second quarter of the Company’s 2022 fiscal year. The accounting treatment for the SPYR Note had financial statement implications to (i) two line items in the Company’s Condensed Consolidated Balance Sheets (specifically, Note receivable, net and Accumulated deficit), (ii) two line items in the Company’s Condensed Consolidated Statements of Operations And Comprehensive Income (Loss) (specifically, Gain on sale of GeoTraq, and Interest expense, net), resulting in a decrease in net income of approximately $1.8 million and a decrease in net loss of approximately $93,000 for the 13 weeks ended July 2, 2022 and October 1, 2022, respectively, and (iii) two line items in the Company’s Condensed Consolidated Statements of Cash Flows (specifically, Gain on sale of GeoTraq and Accretion of note receivable discount), resulting in decrease in net income of approximately $1.8 million for the 26 weeks ended July 2, 2022, and $1.7 million for the 39 weeks ended October 1, 2022. Further, in connection with the preparation of the Company’s Quarterly Report on Form 10-Q for this quarterly period, the Company also received guidance from an additional third-party source in connection with the review of those unaudited condensed consolidated financial statements and related disclosures. However, in connection with the Company’s 2022 fiscal year-end audit and the preparation of its consolidated financial statements and related disclosures for that fiscal year, the Company’s management and the Audit Committee concluded that the carrying value of the SPYR Note, as set forth in the aforementioned Quarterly Reports, should be restated. The initial carrying value of $11.2 million should be restated to be $9.4 million and reflect carrying value of $9.6 million as of October 1, 2022. This quarterly restatement has an impact on net income (loss), but not on operating cash flows for any period.
Restatement of Previously Issued Unaudited Condensed Consolidated Financial Statements
This amended Quarterly Report on Form 10-Q includes unaudited consolidated financial statements for the quarters ended October 1, 2022 and October 2, 2021, as well as relevant unaudited interim pro forma financial information for the quarterly periods ended October 1, 2022 and October 2, 2021.
See Note 3 Restatements and Reclassifications; Note 7 Notes Receivable; Note 19 Loss Per Share; Note 22 Segment Information; and Note 25 Sale of GeoTraq in Part I. Financial Information Item 1. Condensed Consolidated Financial Statements for such restated information on the quarterly unaudited condensed consolidated financial statements for this second quarter of the Company’s 2022 fiscal year. Further, the gain associated with the GeoTraq disposition (Technology segment) has been restated and presented as discontinued operations for the periods ending October 1, 2022. As such, the results of the Technology segment have been reclassified and presented as discontinued operations for the periods ending October 2, 2021.
2
JANONE INC.
INDEX TO FORM 10-Q
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Item 1. |
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Unaudited (Restated) Condensed Consolidated Balance Sheets as of October 1, 2022 and January 1, 2022 |
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Notes to Unaudited Condensed Consolidated Financial Statements (Restated) |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Restated) |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5 |
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Item 6. |
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3
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements
JANONE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per-share amounts)
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October 1, |
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January 1, |
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(As restated) |
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(Unaudited) |
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Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Trade and other receivables, net |
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Inventories |
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Prepaid expenses and other current assets |
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Current assets from discontinued operations |
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Total current assets |
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Property and equipment, net |
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Right to use asset - operating leases |
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Intangible assets, net |
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Note receivable, net |
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Marketable securities |
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Deposits and other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders' Equity (Deficit) |
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Liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued liabilities - other |
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Accrued liability - California Sales Taxes |
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Lease obligation short–term - operating leases |
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Short–term debt |
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Current portion of notes payable |
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Current portion of related party note payable |
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Current liabilities from discontinued operations |
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Total current liabilities |
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Lease obligation long term - operating leases |
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Notes payable - long term portion |
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Long-term portion related party note payable |
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Other noncurrent liabilities |
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Total liabilities |
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(Note 17) |
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Stockholders' equity (deficit): |
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Preferred stock, series A - par value $ |
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Common stock, par value $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Accumulated other comprehensive loss |
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( |
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( |
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Total stockholders' equity (deficit) |
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( |
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( |
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Total liabilities and stockholders' equity (deficit) |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
JANONE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(Dollars in thousands, except per-share)
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For the Thirteen Weeks Ended |
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For the Thirty-Nine Weeks Ended |
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October 1, |
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October 2, |
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October 1, |
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October 2, |
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(As restated) |
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(As restated) |
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Revenues |
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$ |
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$ |
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$ |
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$ |
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Cost of revenues |
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Gross profit |
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Operating expenses: |
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Selling, general and administrative expenses |
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Gain on sale of GeoTraq |
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Operating income (loss) |
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( |
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( |
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( |
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Other income (expense): |
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Interest income (expense), net |
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( |
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( |
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( |
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Gain on Payroll Protection Program loan forgiveness |
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Gain (loss) on litigation settlement, net |
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( |
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Gain on settlement of vendor advance payments |
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Gain on reversal of contingency loss |
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Unrealized loss on marketable securities |
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( |
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( |
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Other income, net |
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Total other income (expense), net |
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( |
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( |
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Income (loss) from continuing operations before provision for income taxes |
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( |
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( |
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( |
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Provision for income taxes |
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Net income (loss) from continuing operations |
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( |
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( |
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( |
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( |
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Net income from discontinued operations, net of tax |
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( |
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( |
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( |
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Net income (loss) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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$ |
( |
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Net income (loss) per share: |
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Basic and diluted loss per share from continuing operations |
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$ |
( |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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Basic income (loss) per share from discontinued operations |
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$ |
( |
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$ |
( |
) |
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$ |
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$ |
( |
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Diluted income (loss) per share from discontinued operations |
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$ |
( |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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Basic income (loss) per share |
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$ |
( |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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Diluted income (loss) per share |
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$ |
( |
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$ |
( |
) |
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$ |
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$ |
( |
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Weighted average common shares outstanding: |
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Basic |
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Diluted |
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Net income (loss) |
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$ |
( |
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$ |
( |
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$ |
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$ |
( |
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Other comprehensive loss, net of tax: |
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Effect of foreign currency translation adjustments |
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( |
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Total other comprehensive income loss, net of tax |
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( |
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Comprehensive income (loss) |
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$ |
( |
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$ |
( |
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$ |
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$ |
( |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
JANONE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
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For the Thirty-Nine Weeks Ended |
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October 1, 2022 |
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October 2, 2021 |
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As restated |
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OPERATING ACTIVITIES: |
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Net income (loss) |
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$ |
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$ |
( |
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Adjustments to reconcile net income (loss) to net cash used in operating |
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Depreciation and amortization |
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Amortization of debt issuance costs |
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Stock based compensation expense |
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Accretion of note receivable discount |
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( |
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Gain on legal settlement |
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( |
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Gain on Payroll Protection Program loan forgiveness |
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( |
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Gain on settlement of vendor advance payments |
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( |
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Gain on reversal of contingent liability |
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( |
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Gain on sale of GeoTraq |
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( |
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Unrealized loss on marketable securities |
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Changes in assets and liabilities: |
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Accounts receivable |
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( |
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( |
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Income taxes receivable |
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Prepaid expenses and other current assets |
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( |
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Inventories |
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Right of use assets |
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( |
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Lease liability |
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Accounts payable and accrued expenses |
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Deposits and other Assets |
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( |
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( |
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Net cash used in operating activities |
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( |
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( |
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INVESTING ACTIVITIES: |
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Purchases of property and equipment |
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( |
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( |
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Purchases of intangibles |
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( |
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( |
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Net cash used in investing activities |
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( |
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( |
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FINANCING ACTIVITIES: |
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Proceeds from equity financing, net |
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Proceeds from issuance of short-term notes payable |
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Proceeds from stock option exercise |
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Proceeds from notes payable |
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Payments on related party notes payable |
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( |
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Payments on notes payable |
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( |
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Payments on short-term notes payable |
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( | ) |
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( | ) |
Net cash provided by financing activities |
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Effect of changes in exchange rate on cash and cash equivalents |
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( |
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INCREASE IN CASH AND CASH EQUIVALENTS |
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CASH AND CASH EQUIVALENTS, beginning of period |
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CASH AND CASH EQUIVALENTS, end of period |
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$ |
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$ |
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Supplemental cash flow disclosures: |
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Interest paid |
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$ |
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$ |
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Income taxes paid |
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Right to use asset - operating leases capitalized |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
JANONE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
(Dollars in thousands)
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Series A Preferred |
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Common Stock |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Deficit |
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Deficit |
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Equity (Deficit) |
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(As restated) |
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Balance, January 1, 2022 |
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$ |
— |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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Share based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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( |
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Net income |
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— |
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— |
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— |
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— |
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— |