Company Quick10K Filing
Appliance Recycling Centers of America
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 2 $7
10-Q 2019-11-19 Quarter: 2019-09-28
10-Q 2019-08-19 Quarter: 2019-06-29
10-Q 2019-05-14 Quarter: 2019-03-30
10-K 2019-03-29 Annual: 2018-12-29
10-Q 2018-08-14 Quarter: 2018-06-30
10-Q 2018-07-02 Quarter: 2018-03-31
10-K 2018-06-12 Annual: 2017-12-30
10-Q 2018-11-13 Quarter: 2017-09-30
10-Q 2017-11-14 Quarter: 2017-09-30
10-Q 2017-08-21 Quarter: 2017-07-01
10-Q 2017-05-16 Quarter: 2017-04-01
10-K 2017-03-31 Annual: 2016-12-31
10-Q 2016-11-15 Quarter: 2016-10-01
10-Q 2016-08-16 Quarter: 2016-07-02
10-Q 2016-05-17 Quarter: 2016-04-02
10-K 2016-04-04 Annual: 2016-01-02
10-Q 2015-11-19 Quarter: 2015-10-03
10-Q 2015-08-12 Quarter: 2015-07-04
10-Q 2015-05-27 Quarter: 2015-04-04
10-K 2015-03-30 Annual: 2015-01-03
10-Q 2014-11-07 Quarter: 2014-09-27
10-Q 2014-08-11 Quarter: 2014-06-28
10-Q 2014-05-09 Quarter: 2014-03-29
10-K 2014-03-14 Annual: 2013-12-28
10-Q 2013-11-07 Quarter: 2013-09-28
10-Q 2013-08-08 Quarter: 2013-06-29
10-Q 2013-05-09 Quarter: 2013-03-30
10-K 2013-03-22 Annual: 2012-12-29
10-Q 2012-11-09 Quarter: 2012-09-29
10-Q 2012-08-10 Quarter: 2012-06-30
10-Q 2012-05-10 Quarter: 2012-03-31
10-K 2012-03-15 Annual: 2011-12-31
10-Q 2011-11-10 Quarter: 2011-10-01
10-Q 2011-08-15 Quarter: 2011-07-02
10-Q 2011-05-13 Quarter: 2011-04-02
10-K 2011-03-17 Annual: 2011-01-01
10-Q 2010-11-15 Quarter: 2010-10-02
10-Q 2010-08-16 Quarter: 2010-07-03
10-Q 2010-05-18 Quarter: 2010-04-03
10-K 2010-03-18 Annual: 2010-01-02
8-K 2020-01-06 Officers
8-K 2019-12-03 Other Events, Exhibits
8-K 2019-11-19 Enter Agreement, Regulation FD, Exhibits
8-K 2019-11-11 Amendment
8-K 2019-11-04 Shareholder Vote
8-K 2019-10-14 Accountant, Exhibits
8-K 2019-09-09 Officers, Amend Bylaw, Exhibits
8-K 2019-08-28 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-06-27 Other Events
8-K 2019-06-25 Other Events, Exhibits
8-K 2019-06-21 Amend Bylaw, Exhibits
8-K 2019-05-20 Other Events, Exhibits
8-K 2019-05-07 Other Events, Exhibits
8-K 2019-04-25 Other Events, Exhibits
8-K 2019-04-19 Amend Bylaw, Exhibits
8-K 2019-03-15 Enter Agreement, Exhibits
8-K 2019-01-16 Other Events, Exhibits
8-K 2019-01-16 Other Events, Exhibits
8-K 2019-01-15 Other Events
8-K 2018-12-26 Enter Agreement, Amend Bylaw, Exhibits
8-K 2018-10-23 Shareholder Vote
8-K 2018-09-18
8-K 2018-08-23 Other Events
8-K 2018-07-05 Other Events, Exhibits
8-K 2018-05-22 Exhibits
8-K 2018-04-25 Enter Agreement, Exhibits
8-K 2018-04-18 Exhibits
8-K 2018-03-22 Leave Agreement
8-K 2018-03-22 Accountant, Exhibits
8-K 2018-03-12 Shareholder Rights, Exhibits
8-K 2018-03-05 Accountant, Exhibits
8-K 2017-12-30
ARCI 2019-09-28
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Note 1: Background
Note 2: Summary of Significant Accounting Policies
Note 3: Trade and Other Receivables
Note 4: Inventory
Note 5: Prepaids and Other Current Assets
Note 7: Property and Equipment
Note 8: Right To Use Asset - Operating Leases
Note 9: Intangible Assets
Note 10: Deposits and Other Assets
Note 11: Accrued Liabilities
Note 12: Accrued Liability - California Sales Tax
Note 13: Income Taxes
Note 14: Short Term Debt
Note 15: Lease Obligations
Note 16: Commitments and Contingencies
Note 17: Series A Preferred Stock; Exchange for Shares of Series A-1 Preferred Stock
Note 18: Shareholders' Equity
Note 19: Loss per Share
Note 20: Major Customers and Suppliers
Note 21: Defined Contribution Plan
Note 22: Segment Information
Note 23: Related Parties
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Funds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information.
Item 6. Exhibits.
EX-31.1 jan-ex311_8.htm
EX-31.2 jan-ex312_9.htm
EX-32.1 jan-ex321_7.htm
EX-32.2 jan-ex322_6.htm

Appliance Recycling Centers of America Earnings 2019-09-28

ARCI 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
TTS 201 417 279 349 245 3 39 259 70% 6.6 1%
BSET 149 281 93 459 276 6 20 137 60% 6.9 2%
FLXS 134 254 49 444 70 -33 -31 112 16% -3.6 -13%
PRPL 59 100 103 336 132 -3 4 72 39% 17.9 -3%
NVFY 22 81 6 57 10 2 2 18 17% 9.1 3%
DXYN 10 264 214 389 83 -25 -5 131 21% -24.5 -9%
ARCI 7 33 15 33 9 -6 -2 6 26% -2.8 -18%
PIR 3 1,239 1,230 1,495 410 -252 -248 220 27% -0.9 -20%
NTZ
JAN

10-Q 1 jan-10q_20190928.htm 10-Q jan-10q_20190928.htm

 

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 September 28, 2019

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 November 11, 2019, there were 1,917,779 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 September 28, 2019 and December 29, 2018

3

 

 

 

 

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the 13 weeks and 39 weeks ended September 28, 2019 and September 29, 2018

4

 

 

 

 

Unaudited Condensed Consolidated Statements of Cash Flows for the 39 weeks ended September 28, 2019 and September 29, 2018

5

 

 

 

 

Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the 13 and 39 weeks ended September 28, 2019 and September 29, 2018

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

32

 

 

 

Item 4.

Controls and Procedures

32

 

 

 

PART II.  OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

33

 

 

 

Item 1A.

Risk Factors

34

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

34

 

 

 

Item 3.

Defaults Upon Senior Securities

34

 

 

 

Item 4.

Mine Safety Disclosures

34

 

 

 

Item 5

Other Information

34

 

 

 

Item 6.

Exhibits

35

 

 

 

SIGNATURES

36

 

2


 

PART I. FINANCIAL INFORMATION

 

ITEM 1. Condensed Consolidated Financial Statements

 

JANONE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

 

 

 

September 28,

2019

 

 

December 29,

2018

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

638

 

 

$

1,195

 

Trade and other receivables, net

 

 

5,877

 

 

 

5,804

 

Income taxes receivable

 

 

148

 

 

 

101

 

Inventories

 

 

1,727

 

 

 

801

 

Prepaid expenses and other current assets

 

 

854

 

 

 

1,036

 

Total current assets

 

 

9,244

 

 

 

8,937

 

Note receivable - ApplianceSmart Holdings, LLC a subsidiary of Live

   Ventures Incorporated

 

 

2,956

 

 

 

3,837

 

Property and equipment, net

 

 

802

 

 

 

617

 

Right to use asset - operating leases

 

 

2,163

 

 

 

 

Intangible assets, net

 

 

18,193

 

 

 

20,988

 

Deposits and other assets

 

 

285

 

 

 

661

 

Total assets

 

$

33,643

 

 

$

35,040

 

Liabilities and Stockholders' Equity

 

 

Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,726

 

 

$

3,169

 

Accrued liabilities - other

 

 

1,312

 

 

 

1,118

 

Accrued liability - California Sales Taxes

 

 

4,688

 

 

 

4,722

 

Short term debt

 

 

791

 

 

 

675

 

Lease obligation short term - operating leases

 

 

1,046

 

 

 

 

Total current liabilities

 

 

11,563

 

 

 

9,684

 

Lease obligation long term - operating leases

 

 

1,150

 

 

 

 

Deferred income taxes, net

 

 

1,726

 

 

 

3,549

 

Related party note payable

 

 

2,500

 

 

 

 

Other noncurrent liabilities

 

 

 

 

 

196

 

Total liabilities

 

 

16,939

 

 

 

13,429

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, series A-1 - par value $0.001 per share 2,000,000 authorized,

   259,729 and 288,588 shares issued and outstanding at September 28, 2019 and

   December 29, 2018, respectively

 

 

 

 

 

 

Common stock, par value $0.001 per share, 10,000,000 shares authorized,

   1,917,779 and 1,694,565 shares issued and outstanding at September 28, 2019

   and at December 29, 2018, respectively

 

 

2

 

 

 

2

 

Additional paid in capital

 

 

39,107

 

 

 

38,660

 

Accumulated other comprehensive loss

 

 

(530

)

 

 

(533

)

Accumulated deficit

 

 

(21,875

)

 

 

(16,518

)

Total stockholders' equity

 

 

16,704

 

 

 

21,611

 

Total liabilities and stockholders' equity

 

$

33,643

 

 

$

35,040

 

 

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 Thirty Nine Weeks Ended

 

 

 

September 28,

2019

 

 

September 29,

2018

 

 

September 28,

2019

 

 

September 29,

2018

 

Revenues

 

$

9,790

 

 

$

10,267

 

 

$

23,684

 

 

$

27,553

 

Cost of revenues

 

 

7,226

 

 

 

6,874

 

 

 

18,103

 

 

 

19,598

 

Gross profit

 

 

2,564

 

 

 

3,393

 

 

 

5,581

 

 

 

7,955

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

5,185

 

 

 

5,064

 

 

 

13,466

 

 

 

12,791

 

Operating loss

 

 

(2,621

)

 

 

(1,671

)

 

 

(7,885

)

 

 

(4,836

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(75

)

 

 

(45

)

 

 

(81

)

 

 

(675

)

Other income, net

 

 

6

 

 

 

251

 

 

 

784

 

 

 

341

 

Total other income (expense), net

 

 

(69

)

 

 

206

 

 

 

703

 

 

 

(334

)

Loss from operations before benefit from income taxes

 

 

(2,690

)

 

 

(1,465

)

 

 

(7,182

)

 

 

(5,170

)

Total benefit from income taxes

 

 

732

 

 

 

205

 

 

 

1,825

 

 

 

1,059

 

Net loss

 

$

(1,958

)

 

$

(1,260

)

 

$

(5,357

)

 

$

(4,111

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared - Series A-1 preferred stock

 

$

 

 

$

 

 

$

 

 

$

 

Dividends declared - Common stock

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic loss per share

 

$

(1.12

)

 

$

(0.87

)

 

$

(3.16

)

 

$

(2.99

)

Diluted loss per share

 

$

(1.12

)

 

$

(0.87

)

 

$

(3.16

)

 

$

(2.99

)

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

1,741,170

 

 

 

1,445,291

 

 

 

1,695,383

 

 

 

1,376,244

 

Diluted

 

 

1,741,170

 

 

 

1,445,291

 

 

 

1,695,383

 

 

 

1,376,244

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(1,958

)

 

$

(1,260

)

 

$

(5,357

)

 

$

(4,111

)

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of foreign currency translation adjustments

 

 

(14

)

 

 

12

 

 

 

3

 

 

 

(25

)

Total other comprehensive income (loss), net of tax

 

 

(14

)

 

 

12

 

 

 

3

 

 

 

(25

)

Comprehensive loss

 

$

(1,972

)

 

$

(1,248

)

 

$

(5,354

)

 

$

(4,136

)

 

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 Thirty Nine Weeks Ended

 

 

 

September 28, 2019

 

 

September 29, 2018

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(5,357

)

 

$

(4,111

)

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

   activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,046

 

 

 

2,993

 

Amortization of debt issuance costs

 

 

111

 

 

 

553

 

Amortization of right to use assets - operating leases

 

 

33

 

 

 

 

Stock based compensation expense

 

 

447

 

 

 

596

 

Gain on sale of property and equipment

 

 

 

 

 

(2

)

Change in deferred rent

 

 

(48

)

 

 

(6

)

Change in deferred compensation

 

 

(148

)

 

 

92

 

Change in deferred income taxes

 

 

(1,823

)

 

 

(1,148

)

Other

 

 

376

 

 

 

(152

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(93

)

 

 

2,484

 

Income taxes receivable

 

 

(47

)

 

 

 

Prepaid expenses and other current assets

 

 

71

 

 

 

(121

)

Inventories

 

 

(919

)

 

 

(168

)

Accounts payable and accrued expenses

 

 

708

 

 

 

2,300

 

Accrued income taxes

 

 

 

 

 

9

 

Net cash provided by (used in) operating activities

 

 

(3,643

)

 

 

3,319

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(436

)

 

 

(197

)

Proceeds from the sale of property and equipment

 

 

 

 

 

2

 

Net payments received from Live Ventures Incorporated note receivable

 

 

881

 

 

 

168

 

Net cash provided by (used in) investing activities

 

 

445

 

 

 

(27

)

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Net payments under line of credit - MidCap Financial Trust

 

 

 

 

 

(5,605

)

Proceeds from issuance of long term debt obligations

 

 

471

 

 

 

562

 

Proceeds from related party note

 

 

2,500

 

 

 

 

Payments on debt obligations

 

 

(355

)

 

 

(819

)

Net cash provided by (used in) financing activities

 

 

2,616

 

 

 

(5,862

)

Effect of changes in exchange rate on cash and cash equivalents

 

 

25

 

 

 

(25

)

DECREASE IN CASH AND CASH EQUIVALENTS

 

 

(557

)

 

 

(2,595

)

CASH AND CASH EQUIVALENTS, beginning of period

 

 

1,195

 

 

 

3,313

 

CASH AND CASH EQUIVALENTS, end of period

 

$

638

 

 

$

718

 

Supplemental cash flow disclosures:

 

 

 

 

 

 

 

 

Interest paid

 

$

71

 

 

$

631

 

Income taxes paid

 

 

44

 

 

 

80

 

Net liabilities assumed by ApplianceSmart

 

 

 

 

 

1,901

 

Right to use asset - operating leases capitalized

 

 

2,272

 

 

 

 

 

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)

 

 

 

Common Stock

 

 

Series A Preferred

 

 

Additional

Paid in

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

 

Equity

 

Balance, June 29, 2019

 

 

1,694,565

 

 

$

2

 

 

 

259,729

 

 

$

 

 

$

38,660

 

 

$

(516

)

 

$

(19,917

)

 

$

18,229

 

Share based compensation

 

 

223,214

 

 

 

 

 

 

 

 

 

 

 

 

447

 

 

 

 

 

 

 

 

 

447

 

Other comprehensive income,

   net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14

)

 

 

 

 

 

(14

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,958

)

 

 

(1,958

)

Balance, September 28, 2019

 

 

1,917,779

 

 

$

2

 

 

 

259,729

 

 

$

 

 

$

39,107

 

 

$

(530

)

 

$

(21,875

)

 

$

16,704

 

 

 

 

Common Stock

 

 

Series A Preferred

 

 

Additional

Paid in

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

 

Equity

 

Balance, June 30, 2018

 

 

1,375,073

 

 

$

1

 

 

 

288,588

 

 

$

 

 

$

37,634

 

 

$

(530

)

 

$

(13,761

)

 

$

23,344

 

Share issuance

 

 

319,492

 

 

 

 

 

 

 

 

$

 

 

 

424

 

 

 

 

 

 

 

 

 

424

 

Share based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

596

 

 

 

 

 

 

 

 

 

596

 

Other comprehensive income,

   net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

 

 

 

 

 

12

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,260

)

 

 

(1,260

)

Balance, September 29, 2018

 

 

1,694,565

 

 

$

1

 

 

 

288,588

 

 

$

 

 

$

38,654

 

 

$

(518

)

 

$

(15,021

)

 

$

23,116

 

 

 

 

Common Stock

 

 

Series A Preferred

 

 

Additional

Paid in

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

 

Equity

 

Balance, December 29, 2018

 

 

1,694,565

 

 

$

2

 

 

 

288,588

 

 

$

 

 

$

38,660

 

 

$

(533

)

 

$

(16,518

)

 

$

21,611

 

Shares cancelled

 

 

 

 

 

 

 

 

(28,859

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share based compensation

 

 

223,214

 

 

 

 

 

 

 

 

 

 

 

 

447

 

 

 

 

 

 

 

 

 

447

 

Other comprehensive income,

   net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,357

)

 

 

(5,357

)

Balance, September 28, 2019

 

 

1,917,779

 

 

$

2

 

 

 

259,729

 

 

$

 

 

$

39,107

 

 

$

(530

)

 

$

(21,875

)

 

$

16,704

 

 

 

 

 

Common Stock

 

 

Series A Preferred

 

 

Additional

Paid in

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

 

Equity

 

Balance, December 30, 2017

 

 

1,375,073

 

 

$

1

 

 

 

288,588

 

 

$

 

 

$

37,634

 

 

$

(493

)

 

$

(10,910

)

 

$

26,232

 

Share issuance

 

 

319,492

 

 

 

 

 

 

 

 

 

 

 

 

424

 

 

 

 

 

 

 

 

 

424

 

Share based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

596

 

 

 

 

 

 

 

 

 

596

 

Other comprehensive income,

   net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25

)

 

 

 

 

 

(25

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,111

)

 

 

(4,111

)

Balance, September 29, 2018

 

 

1,694,565

 

 

$

1

 

 

 

288,588

 

 

$

 

 

$

38,654

 

 

$

(518

)

 

$

(15,021

)

 

$

23,116

 

 

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

 

6


 

Note 1: Background

The accompanying consolidated financial statements include the accounts of JanOne Inc., a Nevada corporation, and its subsidiaries (collectively the “Company” or “JanOne”). On September 10, 2019, Appliance Recycling Centers of America, Inc. changed its name to JanOne Inc.

 

The Company has three operating segments – Biotechnology, Recycling and Technology.

During September 2019, JanOne, through its biotechnology segment, became engaged in developing new and innovative solutions for ending the opioid epidemic ranging from digital technologies to educational advocacy.

ARCA Recycling, Inc. (“ARCA Recycling”), provides turnkey recycling services for electric utility energy efficiency programs. ARCA Canada Inc., provides turnkey recycling services for electric utility energy efficiency programs. Customer Connexx, LLC, provides call center services for electric utility programs.

Through our GeoTraq Inc. (“GeoTraq”) subsidiary, we are engaged in the development, design and, ultimately, we expect the sale of cellular transceiver modules, also known as Mobile IoT modules, and associated wireless services.

All data for common stock, options and warrants have been adjusted to reflect the 1-for-5 reverse stock split (which took effect on April 19, 2019) (the “Reverse Stock Split”) for all periods presented. In addition, all common stock prices, and per share data for all periods presented have been adjusted to reflect the Reverse Stock Split.

We report on a 52- or 53-week fiscal year. Our 2018 fiscal year (“2018”) ended on December 29, 2018, and our fiscal year (“2019”) will end on December 28, 2019, each fiscal year is 52 weeks in length.

Reincorporation in the State of Nevada

On March 12, 2018, we reincorporated from the State of Minnesota to the State of Nevada (the “Reincorporation”) pursuant to a plan of conversion dated March 12, 2018 (the “Plan of Conversion”). The Reincorporation was accomplished by the filing of (i) articles of conversion (the “Minnesota Articles of Conversion”) with the Secretary of State of the State of Minnesota and (ii) articles of conversion (the “Nevada Articles of Conversion”) and articles of incorporation (the “Nevada Articles of Incorporation”) with the Secretary of State of the State of Nevada. Pursuant to the Plan of Conversion, the Company also adopted new bylaws (the “Nevada Bylaws”).

The Reincorporation did not affect any of the Company’s material contracts with any third parties, and the Company’s rights and obligations under such material contractual arrangements continue to be rights and obligations of the Company after the Reincorporation. The Reincorporation did not result in any change in headquarters, business, jobs, management, location of any of the offices or facilities, number of employees, assets, liabilities or net worth (other than as a result of the costs incident to the Reincorporation) of the Company.

The Reincorporation changed the par value of the Company’s common shares from no par value to a par value of $0.001 per share of common stock.

Going concern

We acknowledge that we continue to face a challenging competitive environment as we continue to focus on our overall profitability, including managing expenses. We reported a net loss of $1,958 and $1,260 in for the 13 weeks ended September 28, 2019 and September 29, 2018, respectively. We reported a net loss of $5,357 and $4,111 for the 39 weeks ended September 28, 2019 and September 29, 2018, respectively. In addition, the Company has as of September 28, 2019 total current assets of $9,244 and total current liabilities $11,563 resulting in a net negative working capital of $2,319.

The Company has available cash balances and funds available under the accounts receivable factoring program with Prestige Capital to provide sufficient liquidity to fund the entity’s operations, the entity’s continued investments in center openings and remodeling activities, for at least the next twelve months. The Company expects to generate cash from operations for the remainder of fiscal year 2019. The agreement with Prestige Capital allows the Company to get advance funding of 80% of an unpaid customer’s invoice amount within 2 days and the balance less a fee upon ultimate collection in cash of the invoice. The Company will be able to utilize the available funds under the accounts receivable factoring agreement to provide liquidity, to pursue acquisitions, and other strategic transactions to expand and grow the business to enhance shareholder value. Management also regularly monitors capital market conditions to ensure no other conditions or events exist that may materially affect the Company’s financial conditions and liquidity and the Company may raise additional funds through borrowings or public or private sales of debt or equity securities, if necessary.

Based on the above, management has concluded that at September 28, 2019 the Company is not aware and did not identify any other conditions or events that would cause the Company to not be able to continue business as a going concern for the next twelve months.

 

7


 

Note 2: Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all of the information and notes required for complete financial statements prepared in conformity with U.S. GAAP. In our opinion, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. However, our results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the consolidated financial statements and notes thereto included in our Form 10-K for the fiscal year ended December 29, 2018.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

Certain amounts in the prior year consolidated financial statements have been reclassified to conform to the current year presentation. These reclassifications had no effect on the previously reported net income (loss) or stockholders’ equity.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant estimates made in connection with the accompanying consolidated financial statements include the estimated reserve for doubtful current trade and other receivables, the estimated reserve for excess and obsolete inventory, estimated fair value and forfeiture rates for stock-based compensation, fair values in connection with the analysis of other intangibles and long-lived assets for impairment, valuation allowance against deferred tax assets and estimated useful lives for intangible assets and property and equipment.

Financial Instruments

Financial instruments consist primarily of cash equivalents, trade and other receivables, notes receivables, and obligations under accounts payable, accrued expenses and notes payable. The carrying amounts of cash equivalents, trade receivables and other receivables, accounts payable, accrued expenses and short-term notes payable approximate fair value because of the short maturity of these instruments. The fair value of the long-term debt is calculated based on interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements, unless quoted market prices were available (Level 2 inputs). The carrying amounts of short-term debt at September 28, 2019 and December 29, 2018 approximate fair value.

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments with a maturity of three months or less at the time of purchase. Fair value of cash equivalents approximates carrying value.

Trade Receivables and Allowance for Doubtful Accounts

We carry unsecured trade receivables at the original invoice amount less an estimate made for doubtful accounts based on a monthly review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions. We write off trade receivables when we deem them uncollectible. We record recoveries of trade receivables previously written off when we receive them. We consider a trade receivable to be past due if any portion of the receivable balance is outstanding for more than ninety days. We do not charge interest on past due receivables. Our management considers the allowance for doubtful accounts of $29 and $29 to be adequate to cover any exposure to loss as of September 28, 2019, and December 29, 2018, respectively.

8


 

Inventories

Appliance inventories are stated at the lower of cost, determined on a specific identification basis, or net realizable value. Inventory raw material - chips, are stated at the lower of average cost or net realizable value. We provide estimated provisions for the obsolescence of our appliance inventories, including adjustment to net realizable value, based on various factors, including the age of such inventory and our management’s assessment of the need for such provisions. We look at historical inventory aging reports and margin analyses in determining our provision estimate. A revised cost basis is used once a provision for obsolescence is recorded. The Company does not have a reserve for excess or obsolete inventory at September 28, 2019 and December 29, 2018.

Property and Equipment

Property and Equipment are stated at cost less accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred and additions and improvements that significantly extend the lives of assets are capitalized. Upon sale or other retirement of depreciable property, the cost and accumulated depreciation are removed from the related accounts and any gain or loss is reflected in operations. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The useful life of building and improvements is 18 to 30 years, transportation equipment is 3 to 15 years, machinery and equipment is 5 to 10 years, furnishings and fixtures is 3 to 5 years and office and computer equipment is 3 to 5 years.

We periodically review our property and equipment when events or changes in circumstances indicate that their carrying amounts may not be recoverable or their depreciation or amortization periods should be accelerated. We assess recoverability based on several factors, including our intention with respect to maintaining our facilities and projected discounted cash flows from operations. An impairment loss would be recognized for the amount by which the carrying amount of the assets exceeds their fair value, as approximated by the present value of their projected discounted cash flows.

Intangible Assets

The Company accounts for intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other. Under ASC 350, intangible assets subject to amortization, shall be reviewed for impairment in accordance with the Impairment or Disposal of Long-Lived Assets in ASC 360, Property, Plant, and Equipment.

Under ASC 360, long-lived assets are tested for recoverability whenever events or changes in circumstances (‘triggering event’) indicate that the carrying amount may not be recoverable. In making this determination, triggering events that were considered included:

 

A significant decrease in the market price of a long-lived asset (asset group);

 

A significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition;