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

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

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. ý☒ Yeso No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). ý☒ Yeso  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”,~~filer,” “smaller reporting ~~company”,~~company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

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 ý☒ No

As of ~~November 13, 2017,~~May 19, 2023, there were 3,614,937outstanding ~~6,875,365~~ shares of the registrant’s ~~Common Stock, without~~common stock, with a par ~~value.~~value of $0.001.

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

~~UNAUDITED~~ CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME ~~(LOSS)~~

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

~~1. Nature~~The accompanying consolidated financial statements include the accounts of ~~Business~~JanOne Inc., a Nevada corporation, and ~~Basis of Presentation~~

~~Appliance Recycling Centers of America, Inc. and~~its subsidiaries ~~(“we,”~~(collectively the “Company” or ~~“ARCA”~~“JanOne”) ~~are in~~.

The Company had three operating segments – Biotechnology, Recycling, and Technology. In connection with the ~~business~~sale of providing turnkey appliance recycling and replacement services for electric utilities and other sponsors of energy efficiency programs. We also sell new major household appliances through a chain of Company-owned stores under the name ApplianceSmart^®~~. Through our~~ GeoTraq, Inc. (“GeoTraq”) ~~subsidiary, a development stage company, we are engaged in the development, design~~ and ~~ultimately, we expect~~ the sale of ~~cellular transceiver modules, also known~~ARCA Recycling, Inc. (“ARCA Recycling”) (see Note 18), the accounts for the Recycling and Technology segments have been presented as Cell-ID modules. GeoTraq is part of a new reporting segment for our Company – Technology. On August 15, 2017, we sold our 50% interest in a joint venture operating under the name ARCA Advanced Processing, LLC (AAP”), which recycles appliances from twelve statesdiscontinued operations in the ~~Northeast and Mid-Atlantic regions of the United States.~~

~~The~~ accompanying ~~balance sheet as of December 31, 2016 which has been derived from the audited~~ consolidated financial statements (see Note 3).

During September 2019, JanOne, through its biotechnology segment, broadened its business perspectives to become a pharmaceutical company focused on finding treatments for conditions that cause severe pain and bringing to market drugs with non-addictive pain-relieving properties. Effective December 28, 2022, the Company acquired Soin Therapeutics LLC, a Delaware limited liability company (“STLLC”), and its product, a patent-pending, novel formulation of low-dose naltrexone, (“JAN123”). The product is being developed for the treatment of Complex Regional Pain Syndrome (CRPS), an indication that causes severe, chronic pain generally affecting the arms or legs. At present, there are no truly effective treatments for CRPS. Because of the relatively small number of patients afflicted with CRPS, the FDA has granted Orphan Drug Designation for any product approved for treatment of CRPS. This designation will provide the Company with tax credits for its clinical trials, exemption of user fees, and the potential of seven years of market exclusivity following approval. In addition, development of orphan drugs currently also involves smaller trials and quicker times to approval, given the limited number of patients available to study. However, there can be no assurance that the product will receive FDA approval or that it will result in material sales.

ARCA Recycling was the Company’s Recycling segment and provides turnkey recycling services for electric utility energy efficiency programs in the United States. ARCA Canada Inc. (“ARCA Canada”) provides turnkey recycling services for electric utility energy efficiency programs in Canada. Customer Connexx, LLC (“Connexx”) provides call center services for ARCA Recycling and ARCA Canada. On March 9, 2023, retroactive to March 1, 2023, the Company entered into a Stock Purchase Agreement with VM7 Corporation, a Delaware corporation, under which the Buyer agreed to acquire all of the outstanding equity interests of (a) ARCA Recycling, Inc., a California corporation, (b) Customer Connexx LLC, a Nevada limited liability company, and (c) ARCA Canada Inc., a corporation organized under the laws of Ontario, Canada (“ARCA Canada”; and, together with ARCA and Connexx, the “Subsidiaries”). The principal of the Buyer is Virland A. Johnson, our Chief Financial Officer. The sale of all of the outstanding equity interests of the Subsidiaries to the Buyer under the Purchase Agreement was consummated simultaneously with the execution of the Purchase Agreement (see Note 17). The Company's Board of Directors unanimously approved the Purchase Agreement and the Disposition Transaction. In connection with the disposition of ARCA Recycling, accounts for the Recycling segment have been presented as discontinued operations in the accompanying consolidated financial statements (see Note 3).

GeoTraq Inc. (“GeoTraq”) was the Company’s Technology segment. On May 24, 2022, the Company entered into an Asset Purchase Agreement with SPYR Technologies Inc., pursuant to which the Company sold to SPYR substantially all the assets and none of the liabilities of its wholly-owned subsidiary GeoTraq Inc. The aggregate purchase price for the GeoTraq Assets was $13.5 million, payable in cash and shares of SPYR’s common stock. As of the closing of the transaction on May 24, 2022, SPYR issued to the Company 30,000,000 shares of its common stock at $0.03 per share, and delivered a five-year Promissory Note in the principal amount of $12.6 million. The Promissory Note bears simple interest at the rate of 8% per annum, provides quarterly interest payments due the first day of each calendar quarter, and may be prepaid at any time without penalty. Quarterly interest payments may be made in cash or in SPYR's restricted common stock. The Promissory Note matures on May 23, 2027.

The Company reports on a 52- or 53-week fiscal year. The Company’s 2022 fiscal year (“2022”) ended on December 31, 2022, and the current fiscal year (“2023”) will end on December 30, 2023.

The accompanying financial statements have been prepared under the assumption that the Company will continue as a going concern. Such assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business, however, the issues described below raise substantial doubt about the Company’s ability to do so.

The Company currently faces a challenging competitive environment and is focused on improving its overall profitability, which includes managing expenses. The Company reported a net loss from continuing operations of approximately $640,000 for the 13 weeks ended April 1, 2023. Additionally, as of April 1, 2023, the Company has total current assets of approximately $637,000 and total current liabilities of approximately $3.5 million resulting in a net negative working capital of approximately $2.8 million. Cash provided by operations from continuing operations was approximately $128,000. Additionally, stockholders' equity, as of April 1, 2023, is approximately $13.6 million.

The Company intends to fund operations by using cash on hand and monthly receipts in connection with the sale of its Subsidiaries and funds received from approved Employee Retention Credits (“ERC’s”) (see Note 18). The Company has approximately $69,000 in debt recorded in associated with the financing of its insurance policies. The Company intends to raise funds to support future development of JAN 123 and JAN 101 either through capital raises or structured arrangements. However, the success of such funding cannot be assured.

The ability of the Company to continue as a going concern is dependent upon the success of future capital raises or structured settlements to fund the required testing to obtain FDA approval of JAN 123 and JAN 101, as well as to fund its day-to-day operations. Such approval is contingent on several factors and no assurance can be provided that approval will be obtained. The accompanying financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. While the Company will actively pursue these additional sources of financing, management cannot make any assurances that such financing will be secured or FDA approvals will be obtained.

Note 3: Discontinued Operations

As of April 1, 2023, the Company discontinued operations of its Recycling and Technology segments as follows:

On March 9, 2023, the Company executed a Stock Purchase Agreement with VM7 Corporation, a Delaware corporation, ~~is a wholly owned subsidiary that was formed through a corporate reorganization in July 2011~~under which, as of March 1, 2023, the Buyer agreed to ~~hold our business~~acquire all of ~~selling new major household appliances through a chain~~the outstanding equity interests of Company-owned retail stores. ARCA Canada Inc., a Canadian corporation, is a wholly owned subsidiary that was formed in September 2006 to provide turnkey recycling services for electric utility energy efficiency programs.(a) ARCA Recycling, Inc., a California corporation, is(b) Customer Connexx LLC, a ~~wholly owned subsidiary that was formed in November 1991 to provide turnkey recycling services for electric utility energy efficiency programs. The operating results~~Nevada limited liability company, and (c) ARCA Canada Inc., a corporation organized under the laws of ~~our wholly owned subsidiaries are consolidated in our financial statements.~~

~~AAP is a joint venture that was formed in October 2009 between~~Ontario, Canada (“ARCA Canada”; and, together with ARCA and ~~4301 Operations, LLC (“4301”~~Connexx, the “Subsidiaries”). ARCA and 4301 owned a 50% interest in AAP through August 15, 2017, on which date ARCA sold its 50% interest in AAP. AAP established a regional processing center in Philadelphia, Pennsylvania at which recyclable appliances are processed. The financial position and results of operations of AAP are consolidated in our financial statements through August 15, 2017, based on our conclusion that AAP is a variable interest entity due to our contribution in excess of 50%principal of the total equity, subordinated debt and other forms of financial support. We had a controlling financial interest in AAP and we have provided substantial financial support to fund the operations of AAP since its inception. On August 15, 2017, ARCA sold it’s 50% interest in AAP andBuyer is no longer consolidating the results of AAP in its consolidated financial statements as of that date. Note 6 – Sale and deconsolidation of variable interest entity AAP to these condensed consolidated financial statements.

~~On August 18, 2017, we acquired GeoTraq. GeoTraq is a development stage company that is engaged in the development, design, and, ultimately, we expect,~~Virland A. Johnson, our Chief Financial Officer. The sale of ~~cellular transceiver modules, also known as Cell-ID modules. GeoTraq has created a dedicated Cell-ID transceiver module that we believe can enable~~all of the ~~design~~outstanding equity interests of ~~extremely small, inexpensive products that can operate for years on a single charge, powered by standardly available batteries of diminutive size without~~ the need of recharge. Accordingly, and utilizing Cell-ID technology exclusively, we believe that GeoTraq will provide an exclusive, low-cost solution and service life that will enable new global markets for location-based services (LBS) that could utilize technology similarSubsidiaries to the ~~technology that emergency 911 location systems currently utilize.~~

~~As a result of this transaction, GeoTraq became a wholly-owned subsidiary and, therefore,~~Buyer under the ~~results of GeoTraq are included in our consolidated results as of August 18, 2017.~~

~~2. Inventories~~

~~Inventories, consisting principally of appliances, are stated at~~Purchase Agreement was consummated simultaneously with the ~~lower of cost, determined on a specific identification basis, or net realizable value and consist of:~~

September 30, 2017 December 31, 2016
Appliances held for resale $ 11,219 $ 16,146
Processed metals from recycled appliances held for resale – 139
Other – 6
$ 11,219 $ 16,291

We provide estimated provisions for the obsolescence of our appliance inventories, including adjustments to net realizable value, based on various factors, including the age of such inventory and our management’s assessmentexecution of the need for such provisions. We look at historical inventory aging’s and margin analysis in determining our provision estimate. A revised cost basis is used once a provision for obsolescence is recorded.Purchase Agreement (see Note 18).

~~3. Earnings per share~~

Basic income per common share is computed based on the weighted average number of common shares outstanding. Diluted income per common share is computed based on the weighted average number of shares of common stock outstanding adjusted by the number of additional shares that would have been outstanding had the potentially dilutive shares of common stock been issued. Potentially dilutive shares of common stock include unexercised stock options and warrants. Basic per share amounts are computed, generally, by dividing net income attributable to shareholders’ of the parent by the weighted average number of shares of common stock outstanding. Diluted per share amounts assume the conversion, exercise or issuance of all potential common stock instruments unless their effect is anti-dilutive, thereby reducing the loss or increasing the income per common share. In calculating diluted weighted average shares and per share amounts, we included stock options and warrants with exercise prices below average market prices, for the respective reporting periods in which they were dilutive, using the treasury stock method. We calculated the number of additional shares by assuming the outstanding stock options were exercised and that the proceeds from such exercises were used to acquire shares of common stock at the average market price during the quarter. For the 13 weeks and 39 weeks ended September 30, 2017 and October 1, 2016, we excluded options and warrants to purchase 651 and 651 shares of common stock from the diluted weighted average shares outstanding calculation as the effect of these options were anti-dilutive.

13 Weeks Ended 39 Weeks Ended

September 30,
2017

October 1,
2016

September 30,
2017

October 1,
2016

Basic

Net income (loss) attributed to shareholders’ of parent $ 770 $ 1,123 $ 5,041 $ (1,431 )

Weighted average common shares outstanding 6,655 5,991 6,655 5,940

Basic earnings (loss) per share $ 0.12 $ 0.19 $ 0.76 $ (0.24 )

Diluted

Net income (loss) applicable to diluted earnings (loss) per share $ 770 $ 1,123 $ 5,041 $ (1,431 )

Weighted average common shares outstanding 6,655 5,991 6,655 5,940
Add: options – – – –
Add: common stock warrants 50 – 50 –
Assumed diluted weighted average common shares outstanding 6,705 5,991 6,705 5,940

Diluted earnings (loss) per share $ 0.11 $ 0.19 $ 0.75 $ (0.24 )

~~4. Share-based compensation~~

We recognized share-based compensation expense of $0 and $123 for the 13 weeks ended September 30, 2017, and October 1, 2016 respectively. We recognized share-based compensation expense of $32 and $264 for the 39 weeks ended September 30, 2017 and October 1, 2016, respectively. There is no estimated future share-based compensation expense as of September 30, 2017.

5.~~Acquisition of GeoTraq, Inc.~~

On ~~August 18, 2017,~~May 24, 2022, the Company entered into ~~a series of transactions, acquiring~~an Asset Purchase Agreement with SPYR Technologies Inc., pursuant to which the Company sold to SPYR substantially all of the assets and ~~capital stock~~none of ~~GeoTraq by way~~the liabilities of merger. GeoTraq is a development stage company that is engaged in the development, design, and, ultimately, the sale of cellular transceiver modules, also known as Cell-ID modules. As of August 18, 2017, GeoTraq became aits wholly-owned subsidiary ~~of the Company.~~GeoTraq Inc. No GeoTraq assets or liabilities were included in discontinued operations at December 31, 2022.

The final fair value of the single identifiable intangible asset acquired in the GeoTraq acquisition is a U.S. patent application USPTO reference No. 14724039 titled “Locator Device with Low Power Consumption” togetherIn accordance with the ~~assignment~~provisions of intellectual property that included historical know-how, designs and related manufacturing procedures is $15,963. Total consideration paid for GeoTraq included cash $200, unsecured promissory notes bearing interest atASC 205-20, the annual rate of 1.29%, and maturing on August 18, 2017 in the aggregate principal of $800, and 288,588 shares of newly created convertible series A preferred stock with a final fair value of $14,963. See Note 16 – Series A Preferred Stock to these condensed consolidated financial statements. There were no other assets acquired or liabilities assumed.

At the time of the acquisition of GeoTraq, GeoTraq was a shell company with no business operations, one intangible asset and historical know-how andesigns. GeoTraq is in the development stage and has yet to begin operations. The Company has elected to early adopt ASU 2017-01, which clarifies the definition of a business for purposes of applying ASC 805. The Company has determined that GeoTraq is a single or group of related assets, not a business as clarified by ASU 2017-01 at the time of acquisition.

~~6. Sale and deconsolidation of variable interest entity - AAP~~

The financial position and results of operations of AAP have been consolidated in our financial statements since AAP’s inception based on our conclusion that AAP is a variable interest entity that we controlled due to our contribution in excess of 50% of the total equity, subordinated debt and other forms of financial support. Since inception we provided substantial financial support to fund the operations of AAP. The financial position and results of operations for AAP areseparately reported ~~in our recycling segment. On August 15, 2017, we sold our 50% interest in AAP, and therefore, as of August 15, 2017, no longer consolidate the results of AAP in our financial statements.~~

~~The following table summarizes~~ the assets and liabilities of ~~AAP~~the discontinued operations in the consolidated balance sheets. The assets and liabilities have been reflected as discontinued operations in ~~our financial position~~the consolidated balance sheets as of December 31, ~~2016:~~

Assets December 31, 2016
Current assets $ 438
Property and equipment, net 7,322
Other assets 83
Total assets $ 7,843
Liabilities
Accounts payable $ 1,388
Accrued expenses 523
Current maturities of long-term debt obligations 3,558
Long-term debt obligations, net of current maturities 435
Other liabilities (a) 1,126
Total liabilities $ 7,030

~~(a) Other liabilities represent loans~~2022, and ~~advances between ARCA and AAP that are eliminated in consolidation.~~

~~The following table summarizes the operating results of AAP consolidated in our financial results for the 13 weeks and 39 weeks ended September 30, 2017, and October 1, 2016, respectively:~~

13 Weeks Ended

September 30,
2017 (b)

October 1,
2016

Revenues $ 306 $ 2,076
Gross profit 38 492
Operating income (loss) (140 ) 79
Net income (loss) (165 ) 24

39 Weeks Ended

September 30,
2017 (b)

October 1,
2016

Revenues $ 1,433 $ 5,557
Gross profit 24 967
Operating loss (848 ) (285 )
Net loss (991 ) (490 )

(b) Operating results for AAP were consolidated in the Company’s operating results from inception of AAP through August 15, 2017, the date of our 50% equity sale in AAP. We recorded a gain of $81 on the sale and deconsolidation of our 50% equity interest in AAP. Net Cash outflow arising from deconsolidation of AAP was $157. The Company received $800 in cash consideration for its 50% equity interest in AAP.

~~7. Property and equipment~~

~~Property and equipment as of September 30, 2017, and December 31, 2016,~~ consist of the following:


	December 31, 2022
Assets from discontinued operations
Cash and cash equivalents	$	53
Trade and other receivables, net		7,816
Inventories		366
Prepaid expenses and other current assets		377
Total current assets from discontinued operations		8,612
Property and equipment, net 1		2,705
Right of use asset - operating leases		5,290
Intangible assets, net 2		735
Deposits and other assets		249
Total other assets from discontinued operations		8,979
Total assets from discontinued operations	$	17,591
Liabilities from discontinued operations
Accounts payable	$	4,423
Accrued liabilities - other 3		3,278
Accrued liability - California sales taxes 4		6,264
Lease obligation short-term - operating leases		1,631
Short term debt 5		4,172
Current portion of note payable		381
Related party note		233
Total current liabilities from discontinued operations		20,382
Lease obligation long-term - operating leases		3,816
Notes payable - long-term portion 6		1,339
Long-term portion related party note payable 7		605
Total noncurrent liabilities from discontinued operations		5,760
Total liabilities from discontinued operations	$	26,142

Useful Life (Years)
September 30,
2017

December 31,
2016

Land $ – $ 1,140
Buildings and improvements 18-30 2,122 3,780
Equipment (including computer software) 3-15 7,897 19,260
Projects under construction 73 204
Property and equipment 10,092 24,384
Less accumulated depreciation and amortization (9,098 ) (14,268 )
Property and equipment, net $ 994 $ 10,116

1The Company's property and equipment consisted of the following:


	Useful Life (Years)	December 31, 2022
Buildings and improvements	3-30	$	85
Equipment	3-15		3,915
Projects under construction			1,447
Property and equipment			5,447
Less accumulated depreciation			(2,742	)
Total property and equipment, net, from discontinued operations		$	2,705

Depreciation ~~and amortization~~ expense was ~~$173~~ $60,000and ~~$302~~$79,000 for the 13 weeks ended ~~September 30, 2017~~April 1, 2023 and ~~October 1, 2016,~~April 2, 2022, respectively. ~~Depreciation and amortization~~

2 The Company's intangible assets consisted of the following:


	December 31, 2022
Patent and domains	$	19
Computer software		1,682
Intangible assets		1,701
Less accumulated amortization		(966	)
Total intangible assets	$	735

Amortization expense was ~~$782~~ $36,000and ~~$936~~$54,000 for the 3913 weeks ended ~~September 30, 2017~~April 1, 2023 and ~~October 1, 2016,~~April 2, 2022, respectively.

On January 25, 2017, as disclosed by the Company in Item 2.01 of its Current Report on Form 8-K filed with the SEC on January 31, 2017, the Company sold its’ Compton, California facility (the “Compton Facility”) for $7,103 to Terreno Acacia, LLC. 3 The proceeds from the sale paid off the PNC term loan in the aggregate principal amount of $1,020 that was secured by the property and costs of sale of $325, with the remaining proceeds of $5,758 paid towards the PNC Revolver (as defined below). The Company recorded a gain on the sale of property of $5,163. The Company rented the Compton Facility back from Terreno Acacia, LLC after the completionCompany's accrued liabilities consisted of the ~~sale from January 26, 2017 through April 10, 2017.~~following:

~~8. Intangible assets~~


	December 31, 2022
Compensation and benefits	$	685
Contract liability		290
Accrued incentive and rebate checks		2,037
Accrued taxes		219
Other		47
Total accrued expenses	$	3,278

~~Intangible assets as of September 30, 2017, and December 31, 2016, consist of the following:~~

September 30, 2017 December 31, 2016
Intangible assets GeoTraq, net (See Note 5) $ 15,691 $ –
Recycling contract, net 19 19
Goodwill 38 38
$ 15,748 $ 57

For the 13 Week and 39 Week periods ended September 30, 2017, we recorded amortization expense of $272, related to our finite intangible assets. The useful life and amortization period of the GeoTraq intangible acquired is seven years.

~~9. Deposits and other assets~~

~~Deposits and other assets as of September 30, 2017, and December 31, 2016, consist of the following:~~

September 30, 2017 December 31, 2016
Deposits $ 600 $ 453
Other 151 104
$ 751 $ 557

~~Deposits are primarily refundable security deposits with landlords the~~Historically the Company ~~leases property from.~~

~~10. Accrued liabilities~~

~~Accrued liabilities as of September 30, 2017, and December 31, 2016, consist of the following:~~

September 30, 2017 December 31, 2016
Sales tax estimates, including interest $ 4,610 $ 4,203
Compensation and benefits 741 2,431
Accrued incentive and rebate checks 192 358
Accrued rent 238 263
Warranty 14 26
Accrued payables – 570
Deferred revenue 322 227
Other 110 810
$ 6,227 $ 8,888

~~Sales and Use Tax Assessment~~

~~We operate~~operated its recycling business in ~~twenty-three~~fourteen states in the U.S. and in various provinces in Canada. From time to time, ~~we are~~the Company is subject to sales and use tax audits that could result in additional taxes, penalties and interest owed to various taxing authorities.

~~As previously disclosed,~~The California Department of Tax and Fee Administration (formerly known as the California Board of ~~Equalization~~Equalization) (“~~BOE”~~CDTFA”) conducted a sales and use tax examination covering ~~the Company’s~~ARCA Recycling’s California operations for years 2011, 2012, and 2013. The Company believed it was exempt from collecting sales taxes under service agreements with utility customers that included appliance replacement programs. During the fourth quarter of 2014, the Company received communication from the ~~BOE~~CDTFA indicating they were not in agreement with the Company’s interpretation of the law. As a result, the Company applied for and, as of February 9, 2015, received approval to participate in the ~~California Board of Equalization’s~~CDTFA’s Managed Audit Program. The period covered under this program included the years 2011, 2012, and 2013 and extended through the nine-month period ended September 30, 2014.

On April 13, 2017 the Company received the formal ~~BOE~~CDTFA assessment for sales tax for tax years 2011, 2012, and 2013 in the amount of ~~$4.1~~approximately $4.1 million plus applicable interest of ~~$0.5 million~~$500,000 related to the appliance replacement programs that wethe Company administered on behalf of ~~our~~its customers on which weit did not assess, collect or remit sales tax. The Company ~~intends to appeal~~has appealed this assessment ~~and continue~~ to ~~engage~~ the ~~services of our existing retained sales tax experts throughout the~~CDTFA Appeals Bureau. The appeal remains in process. ~~The BOE tax assessment is subject~~Interest has continued to ~~protest and appeal, and would not need to be funded~~accrue until the matter ~~has been fully resolved through~~is settled.

4 The Company's accrual relating to the ~~appeal process. The Company anticipates that resolution~~California sales tax assessment consisted of the ~~BOE assessment could take up~~following:


	December 31, 2022
Accrued liability - CA sales tax assessment	$	4,132
Accrued liability - interest on CA sales tax assessment		2,132
Total	$	6,264

5 The Company's short-term debt consisted of the following:


	December 31, 2022
Gulf Coast Bank and Trust Company	$	4,206
Gulf Coast Bank and Trust Company loan origination fees		(34	)
Total	$	4,172

6 The Company's long-term debt consisted of the following:


	December 31, 2022
KLC Financial	$	1,781
KLC Financial loan origination fees		(61	)
Total		1,720
Less current portion		(381	)
Total	$	1,339

Related Party ICG Note

On August 28, 2019, ARCA Recycling entered into and delivered to ~~two years.~~

~~11. Line of credit - PNC Bank~~

~~We had~~Isaac Capital Group LLC (“ICG”) a Revolving Credit, Term Loan and Security Agreement, as amended, (“PNC Revolver”) with PNC Bank, National Association (“PNC”) that provided us with a $15,000 revolving line of credit. The PNC Revolver loan agreement included a lockbox agreement and a subjective acceleration clause and as a result we have classified thesecured revolving line of credit aspromissory note, whereby ICG agreed to provide ARCA Recycling with a ~~current liability.~~$2.5 million revolving credit facility (the “ICG Note”). The ~~PNC Revolver~~ICG Note originally matured on August 28, 2020. On August 25, 2020, the ICG Note was ~~collateralized by~~amended to extend the maturity date to December 31, 2020. On March 30, 2021, ARCA Recycling entered into a Second Amendment and Waiver (the “Second Amendment”) to the ICG Note to further extend the maturity date to August 18, 2021 and waive certain defaults under the ICG Note. The ICG Note bears interest at 8.75% per annum and provides for the payment of interest, monthly in arrears. ARCA Recycling will pay a loan fee of 2.0% on each borrowing made under the ICG Note. In connection with entering into the ICG Note, the Borrower also entered into a security agreement in favor of the Lender, pursuant to which ARCA Recycling granted a security interest in all of its assets to the Lender.

The obligations of ARCA Recycling under the ICG Note are guaranteed by the Company. The foregoing transaction did not include the issuance of any shares of the Company’s common stock, warrants, or other derivative securities. As of January 1, 2022, the balance due on ICG Note was $1.0 million. Beginning in April 2022, the revolving credit facility was converted to a term note that amortized ratably through its maturity date of March 2026. The principal amount of the note was $1.0 million, and was to bear interest at 8.75% per annum. Monthly payments on this note were approximately $24,767. ICG is a record and beneficial owner of 13.9% of the outstanding common stock of the Company. Jon Isaac is the manager and sole member of ICG, and the son of Tony Isaac, the Chief Executive Officer of JanOne and, previously, ARCA Recycling.

7 The Company's related party debt consisted of the following:


	December 31, 2022
Isaac Capital Group LLC	$	838
Total		838
Less current portion		(233	)
Total	$	605

In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the consolidated statements of operations and comprehensive income (loss). The results of operations for these entities for the 13 weeks ended April 1, 2023 and April 2, 2022 have been reflected as discontinued operations in the consolidated statements of operations and comprehensive income (loss) and consist of the following:


	13 weeks ended
	April 1, 2023			April 2, 2022
Revenues	$	3,795		$	9,324
Cost of revenues		3,992			7,471
Gross profit		(197	)		1,853
Operating expenses from discontinued operations:
Selling, general and administrative expenses	$	(14,355	)	$	2,263
Total operating expenses from discontinued operations		(14,355	)		2,263
Operating loss from discontinued operations		14,158			(410	)
Other income (expense) from discontinued operations
Interest expense, net		(181	)		(190	)
Loss on litigation settlement					(115	)
Other expense, net		(1	)		(690	)
Total other income (loss), net		(182	)		(995	)
Income (loss) before provision for income taxes from discontinued operations		13,976			(1,405	)
Income tax provision		3,229			3
Net income (loss) from discontinued operations	$	10,747		$	(1,408	)

In accordance with the provisions of ASC 205-20, the Company has separately reported the cash flow activity of the discontinued operations in the consolidated statements of cash flows. The cash flow activity from discontinued operations for the 13 weeks ended April 1, 2023 and April 2, 2022 have been reflected as discontinued operations in the consolidated statements of cash flows and consist of the following:


	13 weeks ended
	April 1, 2023			April 2, 2022
DISCONTINUED OPERATING ACTIVITIES:
Net income (loss) from discontinued operations		10,747			(1,408	)
Depreciation and amortization		96			133
Amortization of debt issuance costs		11			3
Amortization of right-of-use assets		53			(16	)
Change in deferred taxes		3,229			—
Gain on sale of ARCA, net of cash		(15,967	)		—
Changes in assets and liabilities:
Accounts receivable		2,932			(740	)
Inventories		299			(40	)
Prepaid expenses and other current assets		55			19
Accounts payable and accrued expenses		866			1,802
Other assets		(1	)		40
Net cash provided by (used in) operating activities from discontinued operations	$	2,320		$	(207	)
DISCONTINUED INVESTING ACTIVITIES:
Purchases of property and equipment		(123	)		(127	)
Purchase of intangible assets		(33	)		—
Net cash used in investing activities from discontinued operations	$	(156	)	$	(127	)
DISCONTINUED FINANCING ACTIVITIES:
Proceeds from note payable		5,162			—
Payment on related party note		(38	)		—
Proceeds from issuance of short term notes payable		(7,291	)		—
Payments on notes payable		(45	)		(63	)
Net cash used in financing activities from discontinued operations	$	(2,212	)	$	(63	)
Effect of changes in exchange rate on cash and cash equivalents		(5	)		(41	)
DECREASE IN CASH AND CASH EQUIVALENTS		(53	)		(438	)
CASH AND CASH EQUIVALENTS, beginning of period		53			704
CASH AND CASH EQUIVALENTS, end of period	$	—		$	266

Note 4: Trade and other receivables

The Company’s trade and other receivables as of April 1, 2023 and December 31, 2022, respectively, were as follows (in $000’s):


	April 1, 2023		December 31, 2022
Trade and other receivables, net, from discontinued operations	$	—	$	7,816
Other receivables		15		106
Trade and other receivables, net	$	15	$	7,922

Note 5: Prepaids and other current assets

Prepaids and other current assets as of April 1, 2023 and December 31, 2022 consist of the following (in $000’s):


	April 1, 2023		December 31, 2022
Prepaid insurance	$	87	$	364
Prepaid other		182		30
Prepaid expenses from discontinued operations		—		377
Total prepaid expenses and other current assets	$	269	$	771

Note 6: Note receivable

SPYR Note

On May 24, 2022, the Company entered into an Asset Purchase Agreement with SPYR Technologies Inc. (“SPYR”), pursuant to which the Company sold to SPYR substantially all of ~~our~~the assets and ~~PNC was also secured by an inventory repurchase agreement with Whirlpool Corporation solely with respect to Whirlpool purchases only.~~none of the specified liabilities of GeoTraq. In ~~addition, we issued a $750 letter of credit in favor of Whirlpool Corporation. The PNC Revolver required, starting~~connection with the ~~fiscal quarter ending April 2, 2016, that we meet~~Purchase Agreement, SPYR delivered to the Company a ~~specified minimum earnings before~~five-year Promissory Note in the initial principal amount of $12.6 million. The Promissory Note bears simple interest ~~taxes, depreciation and amortization, and continuing~~ at the ~~end~~rate of 8% per annum, provides quarterly interest payments due on the first day of each calendar quarter, ~~thereafter, that we meet~~and may be prepaid at any time without penalty. Interest payments may be remitted in either restricted shares of common stock of SPYR, or in cash. The Promissory Note matures on May 24, 2027. As of April 1, 2023, the Company has accrued receivables of approximately $249,000 in interest income related to the Promissory Note.

In connection with the asset sale, the Company engaged a ~~minimum fixed charge coverage ratio~~third-party valuation firm to assess the fair value of ~~1.1 to 1.0. The PNC Revolver loan agreement limited investments that we could purchase,~~ the amount of other debt and leases that we could incur, the amount of loans that we could issue to our affiliates and the amount we could spend on fixed assets, along with prohibiting the payment of dividends.

~~The interest rate~~consideration received. Based on the ~~PNC Revolver, as stated in our renewal agreement on January 22, 2016,~~valuation, the Promissory Note (“Note”) was ~~PNC Base Rate (as defined below) plus 1.75%~~initially valued at approximately $11.3 million, but was revised to ~~3.25%, or 1-, 2- or 3-month PNC LIBOR Rate plus 2.75% to 4.25%, with~~be approximately $9.5 million upon review of the ~~rate being dependent on our level of fixed charge coverage. The PNC Base Rate meant, for any day, a fluctuating per annum rate of interest equal to~~original valuation by the highest of (i) the interest rate per annum announced from time to time by PNC as its prime rate, (ii) the Federal Funds Open Rate plus 0.5%, and (iii) the one-month LIBOR rate plus 100 basis points (1%).

Company. The amount of ~~available revolving borrowings under~~ the ~~PNC Revolver~~revised discount amount, or approximately $3.2 million, was ~~based on a formula using accounts receivable and inventories. We did not have access~~recorded as an offset to the ~~full $15,000 revolving line of credit due to such formula, the~~principal amount of the ~~letter of credit issued in favor of Whirlpool Corporation~~Note, and will be accreted ratably to interest income over the ~~amount of outstanding loans owed to PNC by out AAP joint venture.~~

~~As discussed above, the Company sold its the Compton Facility building and land for $7,103. The net proceeds from the sale, after costs of sale and payoff~~term of the ~~Term Loan (as defined below), were used~~Note. No charges against income relating to ~~reduce~~ the ~~outstanding~~value of the Note have been recorded for the 13 weeks ended April 1, 2023. The Company will continue to review SPYR's financial trends going further to determine whether additional charges against income should occur.

The balance ~~under our PNC Revolver.~~

On May 1, 2017, the PNC Revolver loan agreement was amended and the term was extended through June 2, 2017. The amendment, effective May 2, 2017, also reduced the maximum amount of borrowing under the PNC Revolver to $6 million. On May 10, 2017 we repaid in full and terminated our existing Revolving Credit, Term Loan and Security Agreement, as amended, with PNC Bank, National Associationappearing on the ~~same date.~~

~~The PNC Revolver loan agreement terminated and~~Company's consolidated balance sheets represents the PNC Revolver was paid in full on May 10, 2017 with funds from MidCap Financial Trust. A letter of credit to Whirlpool Corporation remains outstanding with PNC backed by restricted cash collateral of $750 as of September 30, 2017. See Note 13, long term obligations, for additional information.

~~12. Notes payable – short term~~

On August 18, 2017, the Company, as part of its’ acquisition of GeoTraq, issued unsecured promissory notes to the sellers of GeoTraq with interest at the annual rate of interest of 1.29% maturing on August 18, 2018. The outstandingprincipal balance of the ~~notes payable – short~~Promissory Note, net of the discount balance. During the 13 weeks ended April 1, 2023 and April 2, 2022, approximately $201,000 and $0.00, respectively, of the discount was recorded as interest income. As of April 1, 2023, the net carrying value of the Note was approximately $9.2 million.

VM7 Note

On March 9, 2023, the Company entered into a Stock Purchase Agreement with VM7 Corporation, a Delaware corporation, under which the Buyer agreed to acquire all of the outstanding equity interests of (a) ARCA Recycling, Inc., a California corporation, (b) Customer Connexx LLC, a Nevada limited liability company, and (c) ARCA Canada Inc., a corporation organized under the laws of Ontario, Canada (“ARCA Canada”; and, together with ARCA and Connexx, the “Subsidiaries”). The principal of the Buyer is Virland A. Johnson, our Chief Financial Officer. The sale of all of the outstanding equity interests of the Subsidiaries to the Buyer under the Purchase Agreement was consummated simultaneously with the execution of the Purchase Agreement. The Company's Board of Directors unanimously approved the Purchase Agreement and the Disposition Transaction. The Stock Purchase Agreement is retroactive to March 1, 2023 (see Note 18).

The minimum consideration to be received by the Company from the Disposition Transaction, as discussed above, is $1.6 million per year for 15 years, or $24.0 million in the aggregate, plus cash of $3,000 paid at close. In connection with the Disposition Transaction, the Company used a discount rate of 20% when it valued the aggregate minimum consideration. Management determined that discount rate appropriately addresses any risk that the minimum payments would not be received. The valuation, factoring in that discount rate, yielded a present value of approximately $6.0 million, which, in addition to the $3,000 paid at close, comprises the approximately $6.0 million of net consideration. The amount of the revised discount amount, or approximately $18.0 million, was recorded as an offset to the principal amount of the Note, and will be accreted ratably to interest income over the term of the Note. As of April 1, 2023, the net carrying value of the note was approximately $6.1 million.

Note 7: Intangible Assets

Intangible assets as of ~~September 30, 2017 is $800. Interest accrued is included in accrued~~April 1, 2023 and December 31, 2022 consist of the following (in $000’s):


	April 1, 2023			December 31, 2022
Patent and domains	$	4		$	4
Soin intangibles *	$	19,293		$	19,293
Computer software		3,563			3,563
Intangible assets from discontinued operations		—			735
Intangible assets		22,860			23,595
Less accumulated amortization		(3,926	)		(3,563	)
Total intangible assets	$	18,934		$	20,032

*The Soin intangibles acquired by the Company consist of the following:

Three pending patents related to the methods of using low-dose Naltrexone to treat chronic pain;

Final formula for Naltrexone; and

Orphan drug designation as approved by the FDA.

Intangible amortization expense from continuing operations was $363,000 and $0 for the 13 weeks ended April 1, 2023 and April 2, 2022.

Note 8: Deposits and other assets

Deposits and other assets as of April 1, 2023 and December 31, 2022 consist of the following (in $000’s):


	April 1, 2023		December 31, 2022
Deposits and other assets from discontinued operations	$	—	$	249
Other		16		18
Total deposits and other assets	$	16	$	267

Note 9: Accrued Liabilities

Accrued liabilities as of April 1, 2023 and December 31, 2022 consist of the following (in $000’s):


	April 1, 2023		December 31, 2022
Compensation and benefits	$	101	$	81
Accrued guarantees		130		130
Accrued taxes		47		5
Accrued litigation settlement		340		510
Other		126		280
Accrued expenses from discontinued operations		—		3,278
Total accrued expenses	$	744	$	4,284

Note 10: Income Taxes

The Company recorded an income tax benefit from continuing operations of approximately $227,000 and $0 for the 13 weeks ended April 1, 2023 and April 2, 2022, respectively, and an income tax expense from discontinued operations of approximately $3.2 million and $3,000 for the 13 weeks ended April 1, 2023 and April 2, 2022, respectively. The Company’s overall effective tax rate was 22.9% and 0.2% for the 13 weeks ended April 1, 2023 and April 2, 2022, respectively. The effective tax rates and related provisional tax amounts vary from the U.S. federal statutory rate primarily due to state taxes and certain non-deductible expenses.

Note 11: Short Term Debt

~~13. Long term obligations~~

~~Long~~Short term debt ~~capital lease~~ and other financing obligations as of ~~September 30, 2017,~~April 1, 2023 and December 31, ~~2016,~~2022, consist of the ~~following:~~following (in $000’s):


	April 1, 2023		December 31, 2022
AFCO Finance	$	69	$	274
Total short-term debt	$	69	$	274

September 30, 2017 December 31, 2016

PNC term loan $ – $ 1,020
MidCap financial trust asset based revolving loan 3,616 –
AFCO Finance 639 –
Susquehanna term loans – 3,242
GE 8% loan agreement 482 482
EEI note 103 103
PIDC 2.75% note, due in month installments of $3, including interest, due October 2024 – 287
Capital leases and other financing obligations 36 564
Debt issuance costs, net (1,030 ) (779 )
Total debt obligations 3,846 4,919
Less current maturities (3,846 ) (2,093 )
Long-term debt obligations, net of current maturities $ – $ 2,826

~~PNC Term Loan~~

On January 24, 2011, we entered into a $2,550 Term Loan (“Term Loan”) with the PNC Bank to refinance the mortgage on our Compton Facility. The Term Loan was payable in 119 consecutive monthly principal payments of $21 plus interest commencing on February 1, 2011 and followed by a 120th payment of all unpaid principal, interest and fees on February 1, 2021. The PNC Revolver loan agreement required a balloon payment of $1,020 in principal plus interest and additional fees due on January 31, 2017. The Term Loan was collateralized by the Compton Facility. As disclosed by the Company in Item 2.01 of the Company’s Current Report on Form 8-K filed with the SEC on January 31, 2017, the Term Loan was paid off in full on January 25, 2017 when the Compton Facility was sold.

AFCO Finance

~~MidCap Financial Trust~~

On May 10, 2017, we entered into a Credit and Security Agreement (“Credit Agreement”) with MidCap Financial Trust (“MidCap Financial Trust”), as a lender and as agent for itself and other lenders under the Credit Agreement. The Credit Agreement provides us with a $12,000 revolving line of credit, which may be increased to $16,000 under certain terms and conditions (the “MidCap Revolver”). The MidCap Revolver has a stated maturity date of May 10, 2020, if not renewed. The MidCap Revolver is collateralized by a security interest in substantially all of our assets. The lender is also secured by an inventory repurchase agreement with Whirlpool Corporation for Whirlpool purchases only. The Credit Agreement requires that we meet a minimum fixed charge coverage ratio of 1.00:1.00 for the applicable measuring period as of the end of each calendar month. The applicable measuring period is (i) the period commencing May 1, 2017 and ending on the last day of each calendar month from May 31, 2017 through April 30, 2018, and (ii) the twelve-month period ending on the last day of such calendar month thereafter. The Credit Agreement limits the amount of other debt we can incur, the amount we can spend on fixed assets, and the amount of investments we can make, along with prohibiting the payment of dividends.

The amount of revolving borrowings available under the Credit Agreement is based on a formula using receivables and inventories. We may not have access to the full $12,000 revolving line of credit due to the formula using our receivables and inventories and the amount of any outstanding letters of credit issued by the Lender. The interest rate on the revolving line of credit is the one-month LIBOR rate plus four and one-half percent (4.50%).

On September 30, 2017 and December 31, 2016, our available borrowing capacity under the Credit Agreement is $2,416 and $0, respectively. The weighted average interest rate for the period of May 10, 2017 through September 30, 2017 was 5.66%. We borrowed $45,099 and repaid $41,483 on the Credit Agreement during the period of May 10, 2017 through September 30, 2017, leaving an outstanding balance on the Credit Agreement of $3,616 and $0 at September 30, 2017 and December 31, 2016, respectively.

On September 20, 2017, we received a written notice of default, dated September 20, 2017 (the “Notice of Default”), from MidCap Funding X Trust (the “Agent”), asserting that events of default had occurred with respect to the Credit Agreement. The Agent alleges in the Notice of Default that, as a result of the Company’s recent acquisition of GeoTraq, and the issuance of promissory notes to the stockholders of GeoTraq in connection with such acquisition, the Borrowers have failed to comply with certain terms of the Loan Agreement, and that such failure constitutes one or more Events of Default under the Loan Agreement. Specifically, the Notice of Default states that as a result of the acquisition and related issuance of promissory notes, the Borrowers have failed to comply with (i) a covenant not to incur additional indebtedness other than Permitted Debt (as defined in the Loan Agreement), without the Agent’s prior written consent, and a covenant not to make acquisitions or investments other than Permitted Acquisitions or Permitted Investments (as defined in the Credit Agreement). The Notice of Default also states that the Borrowers’ failure to pledge the stock in GeoTraq as collateral under the Credit Agreement and to make GeoTraq a “Borrower “under the Credit Agreement will become an Event of Default if not cured within the applicable cure period. The Agent has reserved the right to avail itself of any other rights and remedies available to it at law or by contract, including the right to (a) withhold funding, increase reserves and suspend making further advances under the Credit Agreement, (b) declare all principal, interest and other sums owing in connection with the Credit Agreement immediately due and payable in full, (c) charge the Default Rate on amounts outstanding under the Credit Agreement, and/or (d) exercise one or more rights and remedies with respect to any and all collateral securing the Credit Agreement. The Agent has not declared the amounts outstanding under the Credit Agreement to be immediately due and payable but has imposed the default rate of interest, which is 5% in excess of the rates otherwise payable under the Loan Agreement), effective as of August 18, 2017 and continuing until the Agent notifies the Borrowers that the specified Events of Default have been waived and no other Events of Default exist.

The Company strongly disagrees with the Lenders that any Event of Default has occurred and is reserving all of its options with respect to the Credit Agreement. The Company and the Agent are in active discussions for forbearance and resolution of the default, however there can be no assurance the Company and the Agent will be able to agree on terms of the forbearance. The Company is classifying the Mid-Cap Revolver as a current liability until forbearance and resolution of the default is cured.

On August 14, 2017 as a part of the sale of the Company’s equity interest in AAP, Recleim LLC, a Delaware limited liability company (“Recleim”), agreed to undertake, pay or assume the Company’s GE obligations consisting of a promissory note (GE 8% loan agreement) and other payables which were incurred after the issuance of such promissory note. Recleim has agreed to indemnify, and hold ARCA harmless from any action to be taken by GE relating to such obligations. The Company has ~~an offsetting receivable due from Recleim.~~

~~AFCO Finance~~

~~On June 16, 2017, we~~ entered into a financing agreement with AFCO Credit Corporation (“AFCO”) purchased through Marsh Insurance on an annual basis to fund the annual premiums on insurance policies ~~purchased through Marsh Insurance.~~due July 1 of each year. These policies relate to workers’ compensation and various liability policies including, but not limited to, General, Auto, Umbrella, Property, and Directors’ and Officers’. insurance. The total amount of the premiums financed ~~is $1,070~~in July 2022 was approximately $516,000 with an interest rate ~~of 3.567%.~~ranging from approximately 6.0% over the period. An initial down payment of ~~$160~~approximately $129,000 was ~~paid~~made on ~~June 16, 2017 and an~~July 21, 2022 with additional 10 monthly payments of ~~$92 will be~~approximately $59,000, escalating to approximately $69,000 over the term, being made beginning ~~July~~August 1, ~~2017~~2022 and ending on April 1, ~~2018. The outstanding principal at the end of September 30, 2017 and December 31, 2016 was $639 and $0, respectively.~~2023.

~~Susquehanna Term Loans~~

On March 10, 2011, AAP entered into three separate commercial term loans (“BB&T Term Loans”) with Branch Banking Trust Company, as successor to Susquehanna Bank, (“BB&T”) pursuant to the guidelines of the U.S. Small Business Administration 7(a) Loan Program. The aggregate principal amount of the BB&T Term Loans was $4,750, divided into three separate loans with principal amounts of $2,100; $1,400; and $1,250, respectively. The BB&T Term Loans matured in ten years and bore an interest rate of prime plus 2.75%. Borrowings under the BB&T Term Loans were secured by substantially all of the assets of AAP along with liens on the business assets and certain personal assets of the owners of 4301 Operations, LLC. We were a guarantor of the BB&T Term Loans along with 4301 Operations, LLC and its members. In connection with the BB&T Term Loans, BB&T had a security interest in the recycling equipment assets of the Company. The BB&T Term Loans entered into by AAP were paid in full on August 15, 2017 and BB&T’s security interest in the recycling equipment assets of the Company was terminated and released.

~~Energy Efficiency Investments LLC~~

On November 8, 2016, the Company entered into a securities purchase agreement with Energy Efficiency Investments, LLC, pursuant to which the Company agreed to issue up to $7,732 principal amount of 3% Original Issue Discount Senior Convertible Promissory Notes of the Company and related common stock purchase warrants. These notes will be issued from time to time, up to such aggregate principal amount, at the request of the Company, subject to certain conditions, or at the option of Energy Efficiency Investments, LLC. Interest accrues at the rate of eight percent per annum on the principal amount of the notes outstanding from time to time, and is payable at maturity or, if earlier, upon conversion of these notes. The principal amount of these notes outstanding at September 30, 2017 and December 31, 2016, was $103.

~~14.~~Note 12: Commitments and Contingencies

Litigation

~~Contracts~~: We have entered into material contracts with three appliance manufacturers. Under the agreements there are no minimum purchase commitments; however, we have agreed to indemnify the manufacturers for certain claims, allegations or losses with respect to appliances we sell.SEC Complaint

~~Litigation:~~

In February 2012, various individuals commenced a class action lawsuit against Whirlpool Corporation (“Whirlpool”) and various distributors of Whirlpool products, including Sears, The Home Depot, Lowe’s and us, alleging certain appliances Whirlpool sold through its distribution chain, which includes us, were improperly designated with the ENERGY STAR® qualification rating established byOn August 2, 2021, the U.S. ~~Department of Energy~~Securities and the Environmental Protection Agency. The claims against us include breach of warranty claims, as well as various state consumer protection claims. The amount of the claim is, as yet, undetermined. Whirlpool has offered to fully indemnify and defend its distributorsExchange Commission (“SEC”) filed a civil complaint (the “SEC Complaint”) in this lawsuit, including us, and has engaged legal counsel to defend itself and the distributors. We are monitoring Whirlpool’s defense of the claims and believe the possibility of a material loss is remote.

AMTIM Capital Inc. (“AMTIM”) provided management and sales services in respect of our recycling services in Canada, and was paid pursuant to agreements between AMTIM and us. A dispute arose between AMTIM and us with respect to the calculation of amounts due to AMTIM pursuant to the agreements. In a lawsuit filed in the province of Ontario on March 29, 2011, AMTIM claimed a discrepancy in the calculation of fees due to AMTIM by us in excess of $1.6 million. On December 9, 2011 the United States District Court for the District of ~~Minnesota issued~~Nevada naming the Company and one of its executive officers, Virland Johnson, the Company's Chief Financial Officer, as defendants (collectively, the “Defendants”).

The SEC Complaint alleges financial, disclosure and reporting violations against the Company and the executive officer under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5. The SEC Complaint also alleges various claims against the executive officer under Sections 13(a), 13(b)(2)(A), 13(b)(2)(B) and 13(b)(5) of the Exchange Act and Rules 12b-20, 13a-1, 13a-13, 13a-14, 13b2-1, and 13b2-2. The SEC seeks permanent injunctions and civil penalties against the Defendants, and an officer-and-director bar against the executive officer. The foregoing is only a ~~declaratory default judgment~~general summary of the SEC Complaint, which may be accessed on the SEC’s website at https://www.sec.gov/litigation/litreleases/2021/lr25155.htm.

The Company continues to assert that the SEC’s pursuit of this matter will not result in any benefit to investors and instead will only serve as a distraction from its core business. On October 1, 2021, the Company, filed a motion with the court to dismiss the complaint. The SEC filed its response opposing the motions on November 1, 2021.On September 7, 2022, the motions to dismiss were denied by the court. Pursuant to the ~~effect that our method~~automatic stay of ~~calculating~~proceedings under the Private Securities Litigation Reform Act, all discovery was stayed pending the motions to dismiss and continues to be stayed pending the June 23, 2023 mediation to which all of the ~~amounts due~~parties have agreed.

The Defendants strongly dispute and deny the allegations and are vigorously defending themselves against the claims.

Skybridge

On December 29, 2016, the Company served a Minnesota state court complaint for breach of contract on Skybridge Americas, Inc. (“SA”), the Company’s primary call center vendor throughout 2015 and most of 2016. The Company sought damages in the millions of dollars as a result of alleged overcharging by SA and lost client contracts. On January 25, 2017, SA served a counterclaim for unpaid invoices in the amount of approximately $460,000 plus interest and attorneys’ fees. On March 29, 2017, the Hennepin County district court (the “District Court”) dismissed the Company’s breach of contract claim based on SA’s overuse of its Canadian call center but permitted the Company’s remaining claims to ~~AMTIM is correct. Although~~proceed. Following motion practice, on January 8, 2018 the ~~Ontario action continues,~~District Court entered judgment in SA’s favor, which was amended as of February 28, 2018, for a total amount of approximately $614,000, including interest and ~~its outcome is uncertain,~~attorneys’ fees. On March 4, 2019, the Minnesota Court of Appeals (the “Court of Appeals”) ruled and (i) reversed the District Court’s judgment in favor of Skybridge on the call center location claim and remanded the issue back to the District Court for further proceedings, (ii) reversed the District Court’s judgment in favor of Skybridge on the net payment issue and remanded the issue to the District Court for further proceedings, and (iii) affirmed the District Court’s judgment in Skybridge’s favor against the Company’s claim that Skybridge breached the contract when it failed to meet the service level agreements. As a result of the decision by the Court of Appeals, the District Court’s award of interest and attorneys’ fees, etc. was reversed. The Company and SA held a mediation session in July 2020. Trial was held in August 2020 and on February 1, 2021, the District Court assessed damages against the Company in the amount of approximately $715,000 plus interest, fees, and costs and attorneys’ fees of $475,000. In subsequent proceedings, the Appeals Court affirmed the District Court judgment. Of the total amount awarded to SA, less the funds that the Company had previously deposited with the District Court, SA remains entitled to approximately $382,000 of statutory interest, which obligation has been assumed by the Buyer in connection with the ARCA and Subsidiaries Disposition transaction (see Note 18).

GeoTraq

On or about April 9, 2021, GeoTraq, Gregg Sullivan, Tony Isaac, and we, ~~believe~~among others, resolved all of their claims that ~~no further amounts are due under~~related to, among other items, the Company's acquisition of GeoTraq in August 2017, all post-acquisition activities, and Mr. Sullivan’s post-acquisition employment relationship with GeoTraq (all of such claims, the “GeoTraq Matters”). The resolution was effectuated through the parties’ execution and delivery of a Settlement Agreement and Mutual Agreement of Claims (the “GeoTraq Settlement Agreement”).

Under the terms of the Settlement Agreement, the Company, on its own behalf and on behalf of GeoTraq and Mr. Isaac, agreed to tender to Mr. Sullivan an aggregate of $1.95 million (the “GeoTraq Settlement Consideration”) in the following manner: (i) $250,000, which was tendered in cash on or about the date of the Settlement Agreement and (ii) up to 10 quarterly installments of not less than $170,000 each that commenced on June 1, 2021, and shall continue not less frequently than every three months thereafter (the “GeoTraq Installments”). The Company may tender the GeoTraq Installments in cash or in the equivalent value of shares of its common stock (the value of the shares to be determined by a formula set forth in the Settlement Agreement), in either case at the Company's discretion. The Company may also prepay one or more GeoTraq Installments in full or in part at any time or from time to time either in cash or in shares of its common stock (a “GeoTraq Prepayment”). If the Company elects to prepay one or more GeoTraq Installments with shares of its common stock, Mr. Sullivan reserves the right not to consent to a tender thereof in excess of 50% of the value of that specific GeoTraq Prepayment; however, Mr. Sullivan is restricted in the reasons for which he can refuse to provide his written consent. The number of shares of the Company's common stock to be issued upon any GeoTraq Prepayment is determined by a different formula than the one to be utilized for a GeoTraq Installment. On March 17, 2023, the Company issued 103,707 shares of the Company's common stock as payment for its quarterly installment. As of April 1, 2023, two GeoTraq installments remain to be paid: June 30, 2023 and September 30, 2023.

Pursuant to the terms of the Settlement Agreement, Mr. Sullivan provided the Company with his proxy to vote his remaining shares of its Series A-1 Convertible Preferred Stock that the Company had issued to him in connection with its acquisition of GeoTraq in 2017, as well as his proxy for the shares of the Company's common stock into which those shares of preferred stock may be converted. The Company may utilize the proxy in the context of an annual meeting of its stockholders, a special meeting of its stockholders, and a written consent of its stockholders. Subject to the above-described contingent GeoTraq Prepayment tender 50% restriction, Mr. Sullivan provided the Company with the sole ability to determine the time and amount of each conversion of those shares of preferred stock.

The parties to the Settlement Agreement released and forever discharged one another from any and all known and unknown claims that were asserted or could have been asserted arising out of the GeoTraq Litigation Matters. The accrued liability for payments due to Mr. Sullivan is $340,000 and $510,000 as of April 1, 2023 and December 31, 2022, respectively.

Sieggreen

On March 6, 2023, Sieggreen, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. Live Ventures Incorporated, Jon Isaac, and Virland A. Johnson, Defendants, the Company was added as a defendant on March 6, 2023, and was served on March 23, 2023. Plaintiff has alleged causes of action against the Company for (i) violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and (ii) violation of Section 10(b) of the Securities Exchange Act of 1934 and Rules

10b-5(a) and 10b-5(c) promulgated thereunder. The Company has not filed a responsive pleading as of the date of these ~~agreements~~financial statements and westrongly disputes and denies all of the allegations contained therein and will vigorously defend itself against the claims.

Main/270

The Company is a defendant in an action filed on April 11, 2022, in the U.S. District Court Southern District of Ohio, Eastern Division, styled, Trustees Main/270, LLC, Plaintiff, vs ApplianceSmart, Inc. and JANONE, Inc., Defendant, Case no.: 2:22-cv-01938-ALM-EPD. The Company was a guarantor of the lease between the Plaintiff and ApplianceSmart, Inc. Plaintiff alleged a cause of action against the Company in respect of the guaranty and seeks approximately $90,000 therefor. Plaintiff also seeks approximately $1,420,000 against ApplianceSmart and the Company on a joint and several basis. The Company does not believe that it is obligated to Plaintiff in that amount and the parties continue to ~~defend our position relative~~negotiate a potential settlement.

Westerville Square

In an attempt to ~~this lawsuit.~~recover payments due under a lease, in 2019, Westerville Square, Inc., as the landlord, initiated a civil action against the Company, styled Westerville Square, Inc. v. Appliance Recycling Centers Of America, Inc., et al., in the Court of Common Pleas of Franklin County, Ohio, Case No. 19 CV 8627. The case was stayed during the bankruptcy proceedings of ApplianceSmart, Inc., and was reinstated on June 7, 2021. The landlord is currently seeking $120,000, which amount is disputed by the Company. The parties are in the process of attempting to settle the matter.

Other Commitments

On December 30, 2017, the Company disposed of its retail appliance segment and sold ApplianceSmart to Live Ventures Incorporated, a related party. In connection with that sale, as of December 28, 2019, the Company accrued an aggregate amount of future real property lease payments of approximately $767,000 which represented amounts guaranteed or which may have been owed under certain lease agreements to three third party landlords in which the Company either remained the counterparty, was a guarantor, or had agreed to remain contractually liable under the lease (“ApplianceSmart Leases”). A final decree was issued by the court on February 28, 2022, upon the full satisfaction of the Plan, at which time ApplianceSmart emerged from Chapter 11. During the year ended December 31, 2022, the Company reversed approximately $637,000 of the accrual, as the Company is no longer liable for two of these guarantees upon ApplianceSmart’s emergence from bankruptcy. As of April 1, 2023, a balance of approximately $130,000 remains as an accrued liability due to an ongoing dispute concerning one of the leases.

~~We are~~The Company is party from time to time to other ordinary course disputes that we do not believe to be material ~~or have merit. We intend~~ to ~~vigorously defend ourselves against these ordinary course disputes.~~our financial condition as of April 1, 2023.

Note 13: Stockholders’ Equity

Common Stock: Our Articles of Incorporation authorize 200,000,000 shares of common stock that may be issued from time to time having such rights, powers, preferences and designations as the Board of Directors may determine. During the 13 weeks ended April 1, 2023 and April 2, 2022, no shares of common stock were issued in lieu of professional services.

~~15. Income Taxes~~

~~Our overall effective tax rate was 34.4%~~On March 22, 2023, the Company entered into a Securities Purchase Agreement with certain institutional investors for the 39sale by the Company in a registered direct offering of 361,000 shares of the Company’s common stock, par value $0.001 per share, at a purchase price per share of Common Stock of $1.17. The offering closed on March 24, 2023. The aggregate gross proceeds for the sale of the shares of Common Stock were approximately $422,000, before deducting the placement agent fees and related expenses. The Company intends to use the net proceeds for working capital and general corporate purposes.

As of April 1, 2023, and December 31, 2022, there were 3,614,937 and 2,827,410 shares, respectively, of common stock issued and outstanding.

Stock Options: The 2016 Plan, which replaces the 2011 Plan, authorizes the granting of awards in any of the following forms: (i) incentive stock options, (ii) nonqualified stock options, (iii) restricted stock awards, and (iv) restricted stock units, and expires on the earlier of October 28, 2026, or the date that all shares reserved under the 2016 Plan are issued or no longer available. The 2016 Plan provides for the issuance of up to 800,000 shares of common stock pursuant to awards granted under the 2016 Plan. The vesting period is determined by the Board of Directors at the time of the stock option grant. As of April 1, 2023, and December 31, 2022, 100,000 and 90,000 options were outstanding under the 2016 Plan, respectively.

The Company's 2011 Plan, which has expired, authorizes the granting of awards in any of the following forms: (i) stock options, (ii) stock appreciation rights, and (iii) other share-based awards, including but not limited to, restricted stock, restricted stock units or performance shares. As of April 1, 2023, and December 31, 2022, 20,000 were outstanding under the 2011 Plan. No additional awards will be granted under the 2011 Plan.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. There were 10,000 options granted during the 13 weeks ended ~~September 30, 2017~~April 1, 2023.

Additional information relating to all outstanding options is as follows:


				Weighted Average		Aggregate		Weighted Average Remaining
	Options Outstanding			Exercise Price		Intrinsic Value		Contractual Life
Outstanding at January 1, 2022		117,500		$	7.16	$	21		7.0
Cancelled/expired		(7,500	)		—
Outstanding at December 31, 2022		110,000		$	6.27	$	—		6.5
Granted		10,000			1.53
Balance at April 1, 2023		120,000		$	5.87	$	—		6.5
Exercisable at April 1, 2023		115,000		$	6.06	$	—		6.4

The Company recognized approximately $8,000 and ~~a positive tax provision~~$4,000 of ~~$438 against a pre-provision loss of $1,238~~share-based compensation expense for the 3913 weeks ended ~~October~~April 1, ~~2016,~~2023 and April 2, 2022, respectively. ~~The effective tax rates and related provisional tax amounts vary from~~

As ofApril 1, 2023, the ~~U.S. federal statutory rate due to state taxes, foreign taxes,~~Company has approximately $5,400 of unrecognized share-based compensation ~~non-controlling interest, valuation allowance, and certain non-deductible expenses.~~expense associated with stock option awards which the company expects to recognize as share-based compensation expense through Q3 2023.

~~We regularly evaluate both positive and negative evidence related to retaining~~Series A-1 Preferred Stock

Shares of Series A-1 Preferred Stock are convertible into the Company’s common shares at a ~~valuation allowance against certain deferred tax assets. The realization~~ratio of ~~deferred tax assets is dependent upon sufficient future taxable income~~1:20. No shares were converted during the ~~periods when deductible temporary differences~~13 weeks ended April 1, 2023. As of April 1, 2023 and ~~carryforwards are expected to be available to reduce taxable income. We have concluded based on the weight~~December 31, 2022, there were 222,588 shares of evidence that a valuation allowance should be maintained against certain deferred tax assets that we do not expect to utilize in the near future. The Company continues to have a full valuation allowance against its Canadian operations.

~~16.~~ Series AA-1 Preferred Stock outstanding.

Note 14: Mezzanine Equity

Series S Preferred Stock

On ~~August 18, 2017,~~December 28, 2022 the Company acquired ~~GeoTraq~~Soin Therapeutics by way of merger. GeoTraq is a development stage company that is engaged in the development, manufacture, and, ultimately, we expect, sale of cellular transceiver modules, also known as Cell-ID modules. As a result of this transaction, GeoTraq became a wholly-owned subsidiary of the Company. In connection with this transaction, with a potential value of up to $30 million, the Company tendered ~~to the owners of GeoTraq $200,000, issued to them an aggregate of 288,588~~100,000 shares of the ~~Company’s~~Company's Series A S Convertible Preferred Stock. Shares of Series S Convertible Preferred Stock ~~and entered~~are convertible into ~~one-year unsecured promissory notes in the aggregate principal amount of $800,000.~~

To accomplish the designation and issuance of the Series A Preferred Stock, we filed a Certificate of Designation with the Secretary of State of the State of Minnesota. On November 9, 2017, we filed a Certificate of Correction with the Minnesota Secretary of State. The following summary of the Series A Preferred Stock and Certificate of Designation does not purport to be complete and is qualified in its entirety by reference to the provisions of applicable law and to the Certificate of Designation and Certificate of Correction, which is filed as Exhibit 3.1 to the Company’s ~~Quarterly Report on Form 10-Q, as amended, for the quarterly period ended July 1, 2017, and Certificate of Correction, which is filed as Exhibit 3.2. hereto.~~

~~Dividends~~

~~We cannot declare, pay or set aside any dividends on~~common shares of any other class or series of our capital stock unless (in addition to the obtaining of any consents required by our Articles of Incorporation) the holders of the Series A Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend in the aggregate amount of $1.00, regardless of the number of then-issued and outstanding shares of Series A Preferred Stock. Any remaining dividends allocated by the Board of Directors shall be distributed in an equal amount per share to the holders of outstanding common stock and Series A Preferred Stock (on an as-if-converted to common stock basis pursuant to the Conversion Ratio as defined below).

~~Liquidation Rights~~

Immediately prior to the occurrence of any liquidation, dissolution or winding up of the Company, whether voluntary of involuntary, all shares of Series A Convertible Preferred Stock automatically convert into shares of our common stock based upon the then-applicable “conversion ratio” (as defined below) and shall participate in the liquidation proceeds in the same manner as other shares of our common stock.

~~Conversion~~

~~The Series A Convertible Preferred Stock is not convertible into shares of our common stock except as described below.~~

~~Subject to the third sentence of this paragraph, each holder of a share of Series A Preferred Stock has the right, exercisable~~ at any time and from time to time (unless otherwise prohibited by law, rule or regulation, or as restricted below), to convert any or all of such holder’s shares of Series A Preferred Stock into shares of our common stock at the conversion ratio. The “conversation ratio” per share of the Series A Preferred Stock is a ratio of 1:~~100, meaning every one share~~1. As of April 1, 2023 and December 31, 2022, there were 100,000 shares of Series AS Convertible Preferred Stock ~~if and when converted into shares of our common stock, converts into 100 shares of our common stock. Notwithstanding anything to~~outstanding.

Note 15: Earnings Per Share

Net income (loss) per share is calculated using the contrary in the Certificate of Designation, a holder of Series A Preferred Stock may not convert any of such holder’s shares and we may not issue any shares of our common stock in connection with a conversation that would trigger any Nasdaq requirement to obtain shareholder approval prior to such conversion or issuance in connection with such conversion that would be in excess of thatweighted average number of shares of common stock ~~equivalent to 19.9%~~outstanding during the applicable period. Basic weighted average common shares outstanding do not include shares of restricted stock that have not yet vested, although such shares are included as outstanding shares in the Company’s Consolidated Balance Sheet. Diluted net income (loss) per share is computed using the weighted average number of common shares outstanding and if dilutive, potential common shares outstanding during the period. Potential common shares consist of the ~~number~~additional common shares issuable in respect of ~~shares~~restricted share awards, stock options and convertible preferred stock.

The following table presents the computation of ~~common stock as~~basic and diluted net income (loss) per share (in $000’s, except share and per–share data):


	For the Thirteen Weeks Ended
	April 1, 2023			April 2, 2022
Continuing Operations
Basic
Net income (loss) from continuing operations	$	(662	)	$	2,619
Weighted average common shares outstanding		3,199,061			2,827,410
Basic income (loss) per share from continuing operations	$	(0.21	)	$	0.93
Diluted
Net income (loss) from continuing operations	$	(662	)	$	2,619
Weighted average common shares outstanding		3,199,061			3,274,123
Diluted income (loss) per share from continuing operations	$	(0.21	)	$	0.80
Discontinued Operations
Basic
Net income (loss) from discontinued operations	$	10,747		$	(1,408	)
Weighted average common shares outstanding		3,199,061			2,827,410
Basic income (loss) per share from discontinued operations	$	3.36		$	(0.50	)
Diluted
Net income (loss) from discontinued operations	$	10,747		$	(1,408	)
Weighted average common shares outstanding		3,199,061			3,274,123
Diluted income (loss) per share from discontinued operations	$	3.36		$	(0.43	)
Total
Basic
Net income	$	10,085		$	1,211
Weighted average common shares outstanding		3,199,061			2,827,410
Basic income per share	$	3.15		$	0.43
Diluted
Net income	$	10,085		$	1,211
Weighted average common shares outstanding		3,199,061			3,274,123
Diluted income per share	$	3.15		$	0.37

Potentially dilutive securities totaling 120,000 and 116,500 were excluded from the calculation of ~~August 18, 2017 ;~~ ~~provided~~, ~~however~~~~, that holders~~diluted earnings per share for the 13 weeks ended April 1, 2023 and April 2, 2022, respectively, because the effects were anti-dilutive based on the application of the ~~Series A Preferred Stock may effectuate any conversion and we are obligated to issue shares of common~~treasury stock in connection with a conversion that would not trigger such a requirement. The foregoing restriction is of no further force or effect upon the approval of our stockholders in compliance with Nasdaq’s shareholder voting requirements. Notwithstanding anything to the contrary contained in the Certificate of Designation, the holders of the Series A Preferred Stock may not effectuate any conversion and we may not issue any shares of common stock in connection with a conversion until the later of (x) February 28, 2018, or (y) sixty-one days following the date on which our stockholders have approved the voting, conversion, and other potential rights of the holders of Series A Preferred Stock described in the Certificate of Designation in accordance with the relevant Nasdaq requirements.

~~Redemption~~

~~The~~method. Additionally, 222,588 shares of Series AA-1 Preferred Stock, ~~have no redemption rights.~~

~~Preemptive Rights~~

~~Holders~~convertible into approximately 4.5 million of the Company’s common shares, and 100,000 shares of Series AS Preferred Stock, ~~are not entitled to any preemptive rights in respect to any securities~~convertible into 100,000 of the ~~Company, except~~Company's commons shares, were excluded from the calculation of diluted earnings per share as, ~~set forth in the Certificate~~by agreement, these shares could not be converted as of ~~Designation or any other document agreed to by us.~~

~~Voting Rights~~

Each holder of a share of Series A Preferred Stock has a number of votes as is determined by multiplying (i) the number of shares of Series A Preferred Stock held by such holder, and (ii) 100. The holders of Series A Preferred Stock vote together with all other classes and series of common and preferred stock of the Company as a single class on all actions to be taken by the common stockholders of the Company, except to the extent that voting as a separate class or series is required by law. Notwithstanding anything to the contrary herein, the holders of the Series A Preferred Stock may not engage in any vote where the voting power would trigger any Nasdaq requirement to obtain shareholder approval; ~~provided~~, ~~however~~, the holders do have the right to vote that portion of their voting power that would not trigger such a requirement. The foregoing voting restriction lapses upon the requisite approval of the shareholders in compliance with Nasdaq’s shareholder voting requirements in effect at the time of such approval.

~~Protective Provisions~~

Without first obtaining the affirmative approval of a majority of the holders of the shares of Series A Preferred Stock, we may not directly or indirectly (i) increase or decrease (other than by redemption or conversion) the total number of authorized shares of Series A Preferred Stock; (ii) effect an exchange, reclassification, or cancellation of all or a part of the Series A Preferred Stock, but excluding a stock split or reverse stock split or combination of the common stock or preferred stock; (iii) effect an exchange, or create a right of exchange, of all or part of the shares of another class of shares into shares of Series A Preferred Stock; or (iii) alter or change the rights, preferences or privileges of the shares of Series A Preferred Stock so as to affect adversely the shares of such series, including the rights set forth in this Designation; provided, however, that we may, without any vote of the holders of shares of the Series A Preferred Stock, make technical, corrective, administrative or similar changes to the Certificate of Designation that do not, individually or in the aggregate, materially adversely affect the rights or preferences of the holders of shares of the Series A Preferred Stock.

April 1, 2023.

~~17.~~Note 16: Segment Information

~~We operate within targeted markets~~The Company operates through ~~three reportable segments: retail, recycling~~its biotechnology segment for continuing operations. The biotechnology segment commenced operations in September 2019 and ~~technology. The retail segment~~ is ~~composed~~focused on development of ~~income generated through our ApplianceSmart stores, which includes appliance sales~~new and ~~byproduct revenues~~innovative solutions for ending the opioid epidemic ranging from ~~collected appliances.~~digital technologies to educational advocacy. The recycling segment ~~is composed of income generated by~~included all fees charged and costs incurred for collecting, recycling and installing appliances for utilities and other ~~customers and includes~~customers. The recycling segment also included byproduct revenue, which ~~are~~was primarily generated through the recycling of appliances. ~~We have included the results from consolidating AAP in our recycling segment through August 15, 2017.~~ The technology segment ~~is composed~~designed wireless modules to connect devices to the Mobile Internet of ~~all revenue~~Things (“IoT”) which contained location-based service (“LBS”) capabilities and ~~costs incurred or associated with GeoTraq. At this time, GeoTraq. is in the development stage~~can interface to external sensors to allow them to communicate both sensor status and ~~expects to go to market with products and services in the location based services market.~~position information. The nature of products, services and customers for each segment varies significantly. As such, the segments are managed separately. Our Chief Executive Officer has been identified as the Chief Operating Decision Maker (“CODM”). The CODM evaluates performance and allocates resources based on ~~revenues~~sales and income from operations of each segment. ~~Income from operations~~Operating loss represents revenues less cost of revenues and operating expenses, including certain allocated selling, general and administrative costs. There are no ~~inter-segment~~intersegment sales or transfers. As discussed above (see Note 3), the recycling and technology are being presented as discontinued operations for the 13 weeks ended April 1, 2023 and April 2, 2022.

The following tables present our segment information for ~~periods indicated:~~the 13 weeks ended April 1, 2023 and April 2, 2022 (in $000's):

13 Weeks Ended 39 Weeks Ended
September 30,
2017
October 1,
2016
September 30,
2017
October 1,
2016

Revenues
Retail $ 13,678 $ 15,102 $ 44,334 $ 47,769
Recycling 11,806 12,254 30,171 29,688
Technology – – – –
Total revenues $ 25,484 $ 27,356 $ 74,505 $ 77,457

Gross profit
Retail $ 3,996 $ 4,089 $ 12,933 $ 13,149
Recycling 4,433 4,362 10,238 7,929
Technology – – – –
Total gross profit $ 8,429 $ 8,451 $ 23,171 $ 21,078

Operating income (loss)
Retail $ 308 $ (112 ) $ 2,110 $ (549 )
Recycling 1,092 1,527 166 84
Technology (272 ) – (272 ) –
Total operating income (loss) $ 1,128 $ 1,415 $ 2,004 $ (465 )

Depreciation and amortization
Retail $ 42 $ 46 $ 131 $ 151
Recycling 131 256 651 785
Technology 272 – 272 –
Total depreciation and amortization $ 445 $ 302 $ 1,054 $ 936


	Thirteen Weeks Ended
	April 1, 2023			April 2, 2022
Revenues
Biotechnology	$	—		$	—
Discontinued operations		3,795			9,324
Total Revenues	$	3,795		$	9,324
Gross profit
Biotechnology	$	—		$	—
Discontinued operations		(197	)		1,853
Total Gross profit	$	(197	)	$	1,853
Operating loss
Biotechnology	$	(1,099	)	$	(681	)
Discontinued operations		14,158			(410	)
Total Operating loss	$	13,059		$	(1,091	)
Depreciation and amortization
Biotechnology	$	364		$	—
Discontinued operations		96			133
Total Depreciation and amortization	$	460		$	133
Interest (income) expense, net
Biotechnology	$	(475	)	$	2
Discontinued operations		181			190
Total Interest expense, net	$	(294	)	$	192
Net income (loss) before income taxes
Biotechnology	$	(867	)	$	2,619
Discontinued operations		13,976			(1,405	)
Total Net income before income taxes	$	13,109		$	1,214

Note 17: Related Parties

Shared Services

Tony Isaac, the Company’s Chief Executive Officer, is the father of Jon Isaac, President and Chief Executive Officer of Live Ventures Incorporated (“Live Ventures”) and managing member of Isaac Capital Group LLC (“ICG”), a greater than 5% stockholder of the Company. Tony Isaac, Chief Executive Officer, and Richard Butler, Board of Directors member of the Company, are members of the Board of Directors of Live Ventures. The Company also shares certain executive, accounting and legal services with Live Ventures. The total services shared were approximately $32,000and $72,000 for the 13 weeks ended April 1, 2023 and April 2, 2022, respectively. Customer Connexx rents approximately 9,900 square feet of office space from Live Ventures in Las Vegas, Nevada. The total rent and common area expense was approximately $36,000 and $62,000 for the 13 weeks ended April 1, 2023 and April 2, 2022, respectively.

Sale of ARCA and Connexx

Note 18. Sale of ARCA and Subsidiaries

The economic aspects of the Disposition Transaction are: (i) the Company reduced the liabilities on its consolidated balance sheets by approximately $17.6 million, and includes those liabilities related to the California Business Fee and Tax Division; (ii) the Company will receive not less than $24.0 million in aggregate monthly payments from the Buyer, which payments are subject to potential increase due to the Subsidiaries’ future performance; and (iii) during the next five years, the Company may request that the Buyer prepay aggregate monthly payments in the aggregate amount of $1 million. The Company also received one thousand dollars for the equity of each of the Subsidiaries at the closing. Each monthly payment is to be the greater of (a) $140,000 (or $100,000 for each January and February during the 15-year payment period) or (b) a monthly percentage-based payment, which is an amount calculated as follows: (i) 5% of the Subsidiaries’ aggregate gross revenues up to $2,000,000 for the relevant month, plus (ii) 4% of the Subsidiaries’ aggregate gross revenues between $2,000,000 and $3,000,000 for the relevant month, plus (iii) 3% of the Subsidiaries aggregate gross revenues over $3,000,000 for the relevant month. The Buyer will receive credit toward the payment of the first monthly payment (March of 2023) for any payments, distributions, or cash dividends paid by any of the Subsidiaries to the Seller on or after March 9, 2023. Additionally, upon settlement of the continuing dispute between ARCA and the California Business Fee and Tax Division (as to which settlement, there can be no assurance), ARCA will pay to the Company 50% of the amount of the reduction between the current assessment and any such settlement. Further, ARCA and Connexx are due to receive from the Internal Revenue Service two payments in the aggregate amount of approximately $931,000 in connection with the Employee Retention Credit provisions of the Coronavirus Aid, Relief, and Economic Security Act and the Taxpayer Certainty and Disaster Tax Relief Act of 2020. ARCA and Connexx have received these two ERC payments and, as of April 1, 2023, have paid $454,000 to the Company. The balance of the ERC payments due, as of April 1, 2023, was $477,000.

The minimum consideration to be received by the Company from the Disposition Transaction, as discussed above, is $1.6 million per year for 15 years, or $24.0 million in the aggregate, plus cash of $3,000 paid at close. In connection with the Disposition Transaction, the Company used a discount rate of 20% when it valued the aggregate minimum consideration. Management determined that discount rate appropriately addresses any risk that the minimum payments would not be received. The valuation, factoring in that discount rate, yielded a present value of approximately $6.0 million, which, in addition to the $3,000 paid at close, comprises the approximately $6.0 million of net consideration. Additionally, the calculation of the gain on disposition includes the book value in excess of assets disposed of, or approximately $9.8 million.

The following table details the calculation of the gain on sale of ARCA and subsidiaries, as shown on the income statement (in $000's):


Total minimum consideration	$	6,023
Payment from buyer		3
Net consideration	$	6,026
Accounts payable		5,323
Accrued liabilities		3,187
Accrued liabilities - California state sales tax		6,320
Lease liabilities		5,285
Debt		4,530
Accumulated other comprehensive loss		(604	)
Total disposal of liabilities		24,041
Total consideration		30,067
Cash		145
Accounts receivable		4,884
Inventory		67
Property, plant and equipment		2,767
Intangible assets		732
Right-of-use assets		5,075
Other assets		574
Total disposal of assets		14,244
Total gain on sale	$	15,823

Note 19. Subsequent event

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have been no events that have occurred that would require adjustments to disclosures in its condensed consolidated financial statements.

September 30,
2017

December 31,
2016

Assets
Retail $ 15,285 $ 17,559
Recycling 15,721 24,297
Technology 15,185 –
Total assets $ 46,191 $ 41,856

Intangible assets
Retail $ 2 $ –
Recycling 55 57
Technology 15,691 –
Total intangible assets $ 15,748 $ 57

~~18. Subsequent Events~~

~~None.~~

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Dollars stated in thousands, except per–share amounts.

Forward-Looking and Cautionary Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which involve risks and uncertainties. You can identify forward-looking statements because they contain words such as ‘‘believes,’’ ‘‘expects,’’ ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘seeks,’’ ‘‘approximately,’’ ‘‘intends,’’ ‘‘plans,’’ ‘‘estimates’’ or ‘‘anticipates’’ or similar expressions that concern our strategy, plans or intentions. Any statements we make relating to our future operations, performance and results, and anticipated liquidity are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those we expected. We derive most of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, including, without limitation, in conjunction with the forward-looking statements included in this Form 10-Q, are disclosed in “Item 1-Business, Item 1A – Risk Factors” of our ~~Annual Report on~~ Form 10-K ~~for the fiscal year ended December 31, 2016~~ and Part II, Item 1A of this ~~Quarterly Report on~~ Form 10-Q. ~~Some of the factors that we believe could affect our results include:~~

~~our individual retail stores’ profitability;~~

~~the volume of appliance sales;~~

~~the strength of energy conservation recycling programs;~~

~~our continued ability to purchase product from our suppliers at acceptable prices;~~

~~the ability of our individual retail stores to meet planned revenue levels;~~

~~the number of retail stores;~~

~~costs and expenses being realized at higher than expected levels;~~

~~our ability to secure an adequate supply of special-buy appliances for resale;~~

~~the ability to secure appliance recycling and replacement contracts with sponsors of energy efficiency programs;~~

~~the ability of customers to supply units under their recycling contracts with us;~~

~~the continued availability of our current line of credit and the outcome of the pending sales and use tax examination in California; and~~

~~general economic conditions affecting consumer demand for appliances.~~

We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this Quarterly Report on Form 10-Q may not in fact occur. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. Our MD&A should be read in conjunction with our ~~Annual Report on~~ Form 10-K ~~for the fiscal year ended December 31, 2016~~ (including the information presented therein under the caption Risk Factors), ~~as amended, as well as~~together with our Quarterly Reports on Forms 10-Q and other publicly available information. All amounts herein are unaudited.

Overview

~~Overview~~

~~Appliance~~We are focused on finding treatments for conditions that cause severe pain and bringing to market drugs with non-addictive pain-relieving properties. In addition, through our now-sold subsidiaries ARCA Recycling, ~~Centers of America, Inc.~~Connexx, and ~~Subsidiaries (“~~ARCA Canada, we~~” the “Company” or “ARCA”) are~~ were engaged in the business of ~~being the bridge between utilities or manufacturers to their customers by~~ recycling ~~replacing, and selling~~ major household appliances in North ~~America. We are committed to~~America by providing turnkey appliance recycling and replacement services for utilities and other sponsors of energy efficiency ~~and have been a pioneer~~programs. Also, through our now-sold GeoTraq Inc. subsidiary, we were engaged in ~~appliance recycling programs. We expect~~the development, design of wireless transceiver modules with technology that ~~our recent acquisition of GeoTraq, a development stage company, will ultimately allow us to market and sell products and services that capitalize on~~provides LBS directly from global Mobile IoT networks.

During the large under-served portion of the location based services market that is not addressed by existing solutions. RFID and Wi-Fi require close proximity for asset tracking, while GPS is too bulky and power hungry for many needs. GeoTraq addresses the white space in-between by exclusively using Cell-ID technology. GeoTraq’s patented technology allows for a substantially lower cost solution, extended service life, a small form factor and even disposable devices, whichperiods disclosed in this Quarterly Report, we ~~believe can significantly reduce return logistics costs.~~

~~We operate~~operated three reportable segments:

•

Biotechnology: Our biotechnology segment is focused on finding treatments for conditions that cause severe pain and bringing to market drugs with non-addictive pain-relieving properties.

•

Recycling: Our recycling segment is a turnkey appliance recycling program. We receive fees charged for recycling, replacement and additional services for utility energy efficiency programs and have established 18 Regional Processing Centers (“RPCs”) for this segment throughout the United States and Canada. On March 9, 2023, we entered into a Stock Purchase Agreement, retroactive to March 1, 2023, with VM7 Corporation, a Delaware corporation, under which the Buyer agreed to acquire all of the outstanding equity interests of our recycling segment. Consequently, the results for this segment are reported as discontinued operations for the 13 weeks ended April 1, 2023 and April 2, 2022.

•

Technology: We suspended all operations for GeoTraq, and, on May 24, 2022, sold substantially all of its assets. The results for this segment are reported as discontinued operations for the 13 weeks ended April 1, 2023 and April 2, 2022.

	·	~~Retail: Our retail segment offers the latest in innovative appliances from major manufactures. We generate income from the sale of appliances and related services through 18 ApplianceSmart~~^® stores in four geographic areas. We have an online presence. We have two product lines, new and out-of-the-box that give the large manufacturers a channel to move their product without disrupting their normal distribution channels.

	·	Recycling: Our recycling segment is a turnkey appliance recycling program. We receive fees charged for recycling, replacement and additional services for utility energy efficiency programs and have established 17 Regional Processing Centers (“RPCs”) for this segment throughout the United States and Canada.

	·	Technology: Our technology segment is in the development stage with the recent acquisition of GeoTraq. GeoTraq is in the process of developing technology to enable low cost location based products and services through the use of Cell-ID technology.

For the Thirteen Weeks Ended ~~September 30, 2017~~April 1, 2023 and ~~October 1, 2016~~April 2, 2022

Results of Operations

The following table sets forth certain statement of operations items and as a percentage of revenue, for the periods ~~indicated:~~indicated (in $000's):

13 Weeks Ended 13 Weeks Ended
September 30, 2017 October 1, 2016
Statement of Income Data (in Thousands):
Revenue $ 25,484 100.0% $ 27,356 100.0%
Cost of revenue 17,055 66.9% 18,905 69.1%
Gross profit 8,429 33.1% 8,451 30.9%
Selling, general and administrative expense 7,301 28.6% 7,036 25.7%
Operating income 1,128 4.4% 1,415 5.2%
Interest (expense), net (207 ) -0.8% (341 ) -1.2%
Other income (expense) 329 1.3% 61 0.2%
Net income before income taxes 1,250 4.9% 1,135 4.1%
Provision (benefit) for income taxes 563 2.2% – 0.0%
Net income before noncontrolling interest 687 2.7% 1,135 4.1%
Net income (loss) attributed to noncontrolling interest 83 0.3% (12 ) 0.0%
Net income attributed to shareholders' of parent $ 770 3.0% $ 1,123 4.1%


	13 Weeks Ended			13 Weeks Ended
	April 1, 2023			April 2, 2022
Statement of Operations Data:
Revenues	$	—		$	—
Cost of revenues		—			—
Gross profit		—			—
Selling, general and administrative expenses		1,099			681
Operating loss		(1,099	)		(681	)
Interest income (expense), net		475			(2	)
Gain on litigation settlement		—			1,950
Unrealized loss on marketable securities		(247	)		—
Gain on reversal of contingency loss		—			637
Other income, net		(18	)		715
Net income (loss) before provision for income taxes		(889	)		2,619
Income tax benefit		(227	)		—
Net income (loss) from continuing operations		(662	)		2,619
Income (loss) from discontinued operations		13,976			(1,405	)
Income tax provision for discontinued operations		3,229			3
Net income (loss) from discontinued operations		10,747			(1,408	)
Net income	$	10,085		$	1,211

The following tables set forth revenues for key product and service categories, percentages of total revenue and gross profits earned by key product and service categories and gross profit percent as compared to revenues for each key product category ~~indicated:~~indicated (in $000's):


	13 Weeks Ended					13 Weeks Ended
	April 1, 2023					April 2, 2022
	Net		Percent			Net		Percent
	Revenue		of Total			Revenue		of Total
Revenue
Revenue from discontinued operations	$	3,795		100.0	%	$	9,324		100.0	%
Biotechnology		—		0.0	%		—		0.0	%
Total Revenue	$	3,795		100.0	%	$	9,324		100.0	%


	13 Weeks Ended						13 Weeks Ended
	April 1, 2023						April 2, 2022
	Gross			Gross			Gross		Gross
	Profit			Profit %			Profit		Profit %
Gross Profit
Gross profit from discontinued operations	$	(197	)		-5.2	%	$	1,853		19.9	%
Biotechnology		—			0.0	%		—		0.0	%
Total Gross Profit	$	(197	)		-5.2	%	$	1,853		19.9	%

13 Weeks Ended 13 Weeks Ended
September 30, 2017 October 1, 2016
Net Percent Net Percent
(in the Thousands) Revenue of Total Revenue of Total
Revenue
Retail Boxed $ 8,718 34.2% $ 10,236 37.4%
Retail UnBoxed 4,288 16.8% 4,102 15.0%
Retail Delivery 259 1.0% 21 0.1%
Retail Service, Parts & Accessories 195 0.8% 560 2.0%
Extended Warranties, net 218 0.9% 183 0.7%
Recycling, Byproducts, Carbon Offset 8,608 33.8% 8,501 31.1%
Replacement Appliances 3,198 12.5% 3,753 13.7%
Total Revenue $ 25,484 100.0% $ 27,356 100.0%

Revenue

13 Weeks Ended 13 Weeks Ended
September 30, 2017 October 1, 2016
Gross Gross Gross Gross
Profit Profit % Profit Profit %
Gross Profit
Retail Boxed $ 1,657 19.0% $ 3,226 31.5%
Retail UnBoxed 2,395 55.9% 1,308 31.9%
Retail Delivery (283 ) -109.3% (1,651 ) -7861.9%
Retail Service, Parts & Accessories (161 ) -82.6% 528 94.3%
Extended Warranties, net 218 100.0% 183 100.0%
Recycling, Byproducts, Carbon Offset 3,476 40.4% 2,914 34.3%
Replacement Appliances 1,127 35.2% 1,943 51.8%
Total Gross Profit $ 8,429 33.1% $ 8,451 30.9%

~~Revenue~~

Revenue decreased ~~$1,872~~by approximately $5.5 million, or ~~6.8%~~59.3%, for the 13 weeks ended ~~September 30, 2017~~April 1, 2023, as compared to the 13 weeks ended ~~October 1, 2016. On July 18, 2017 the Company had a fire at its’ Reynoldsburg store in Columbus, OH.~~April 2, 2022. The ~~damage caused total loss of~~decrease is primarily due to reduced demand and inventory of $764. The inventory loss has been received by the Company from our insurance carrier. The Reynoldsburg store is expected to re-open in November 2017. The inventory loss and resulting business interruption and loss of profit is insured subject to a $10 deductible. Sales were adversely affectedavailability during the 13 weeks ended ~~September 30, 2017 due to lack~~April 1, 2023, as well as the disposition of ~~operations at the Reynoldsburg store. In the 13 weeks ended October~~our recycling segment as of March 1, ~~2016, the Company recorded a one-time carbon offset sale of $1,048.~~2023.

~~Revenue decreased in the following categories as compared to the prior year period:~~

~~Retail Boxed $1,518 or 14.8%, Retail Service, Parts and Accessories $365 or 65.2%, and Replacement Appliances $555 or 14.8%.~~

~~The revenue decreases were partially offset by the following increases in revenue as compared to the prior year period:~~

~~Revenue increased in Recycling, Byproducts, Carbon Offset $107 or 1.3%, Extended Warranties,net $35 or 19.1%, Retail Delivery $238, and Retail Unboxed $186 or 4.5%.~~

Cost of Revenue

Cost of revenue decreased ~~$1,850, or 9.8%~~by approximately $3.5 million for the 13 weeks ended ~~September 30, 2017~~April 1, 2023, as compared to the 13 weeks ended ~~October~~April 2, 2022. The decrease is primarily due the disposition of our recycling segment as of March 1, ~~2016, primarily as a result of the change in revenue discussed above as well as the changes in gross profit discussed below. The Company has made several vendor changes in the area of delivery~~2023.

Selling, General and ~~transportation to improve scalability, cost~~Administrative Expense

Selling, general and ~~customer service. Retail UnBoxed Revenue cost of revenue has decreased and the resulting gross profit percentage has~~administrative expenses increased ~~due to re-negotiated purchase discounts with the Company’s UnBoxed vendors.~~

~~Gross Profit~~

~~Gross profit decreased $22~~by approximately $418,000, or ~~0.3%~~61.5%, for the 13 weeks ended ~~September 30, 2017~~April 1, 2023, as compared to the 13 weeks ended ~~October 1, 2016.~~

~~Gross profit decreased in the following categories as compared~~April 2, 2022, primarily due to increased amortization costs relating to the ~~prior year period:~~Soin intangibles. This increase relates only to continuing operations.

~~Retail Boxed $1,569 or 48.6%, Retail Service, Parts and Accessories $689 or 130.5% and Replacement Appliances $816 or 42.0%.~~Interest Income, net

~~Gross profit decreases were partially offset~~Interest income, net increased by ~~the following increases in gross profit as compared to the prior year period.~~

~~Retail UnBoxed $1,087 or 83.1% and Retail Deliver $1,368, Extended Warranties, net $35 or 19.1% and Recycling, Byproducts, Carbon Offset $562 or 19.3%.~~

~~Gross profit margin as a percentage of sales were improved for Retail UnBoxed 55.9% vs. 31.9%, while Retail Delivery had less of loss, Recycling, Byproducts, Carbon Offset 40.4% vs. 34.3%.~~

~~Gross profit margin as a percentage of sales declined for Retail Boxed 19.0% vs. 31.5%, Retail Service, Parts and Accessories (82.6%) vs. 94.3%.~~

~~Selling, General and Administrative Expense~~

~~Selling, general and administrative expense increased $265 or 3.8%,~~approximately $477,000 for the 13 weeks ended ~~September 30, 2017~~April 1, 2023, as compared to the 13 weeks ended ~~October~~April 2, 2022 primarily due to the accretion of discount in connection with the promissory note with SPYR and receivable from VM7 (see Note 18), as well as interest recorded on the note with SPYR.

Unrealized Loss on Marketable Securities

For the 13 weeks ended April 1, ~~2016.~~

~~Operating Income~~

~~As a result~~2023, an unrealized loss on marketable securities of approximately $247,000 was recorded to mark to fair value securities received in connection to the ~~factors described above, operating income~~sale of ~~$1,128~~GeoTraq. There were no similar transactions for the 13 weeks ended September 30, 2017, represented a decrease of $287 over the comparable prior year 13 weeks ended October 1, 2016 of $1,415. We expect to receive the business interruption proceeds from the Reynoldsburg store fire in the last quarter of the Company’s fiscal year.April 2, 2022.

~~Interest Expense, net~~

Interest expense net decreased $134 or 39.3%, for the 13 weeks ended September 30, 2017 as compared to the 13 weeks ended October 1, 2016 primarily due to decreased rates and amounts of interest paid as a result of decreased borrowing.

~~Other Income and Expense~~

~~Other income and expense increased $268 for the 13 weeks ended September 30, 2017 as compared to the 13 weeks ended October 1, 2016.~~

~~Provision for (benefit from) Income Taxes~~

We recorded a provision for income taxes of $563 for the 13 weeks ended September 30, 2017, compared with a provision of $0 in the same period of 2016. The provision for income taxes for the 13 weeks ended September 30, 2017, increased over the same period of 2016 by $563.

~~Net Income~~

~~The factors described above led to a net income of $770 for the 13 weeks ended September 30, 2017, a decrease of $353 from a net income of $1,123 for the 13 weeks ended July 2, 2016.~~

~~For the Thirty-Nine Weeks Ended September 30, 2017 and October 1, 2016~~

~~Results of Operations~~

~~The following table sets forth certain statement of operations items and as a percentage of revenue, for the periods indicated:~~

39 Weeks Ended 39 Weeks Ended
September 30, 2017 October 1, 2016
Statement of Income Data (in Thousands):
Revenue $ 74,505 100.0% $ 77,457 100.0%
Cost of revenue 51,334 68.9% 56,379 72.8%
Gross profit 23,171 31.1% 21,078 27.2%
Selling, general and administrative expense 21,167 28.4% 21,543 27.8%
Operating income (loss) 2,004 2.7% (465 ) -0.6%
Interest (expense), net (636 ) -0.9% (928 ) -1.2%
Other income (expense) 5,559 7.5% 155 0.2%
Net income (loss) before income taxes 6,927 9.3% (1,238 ) -1.6%
Provision (benefit) for income taxes 2,382 3.2% 438 -0.6%
Net income (loss) before noncontrolling interest 4,545 6.1% (1,676 ) -2.2%
Net income (loss) attributed to noncontrolling interest 496 0.7% 245 0.3%
Net income (loss) attributed to shareholders' of parent $ 5,041 6.8% $ (1,431 ) -1.8%

39 Weeks Ended 39 Weeks Ended
September 30, 2017 October 1, 2016
Net Percent Net Percent
(in the Thousands) Revenue of Total Revenue of Total
Revenue
Retail Boxed $ 28,405 38.1% $ 31,168 40.2%
Retail UnBoxed 13,206 17.7% 14,042 18.1%
Retail Delivery 959 1.3% 786 1.0%
Retail Service, Parts & Accessories 684 0.9% 1,121 1.4%
Extended Warranties, net 1,080 1.4% 652 0.8%
Recycling, Byproducts, Carbon Offset 20,952 28.1% 19,703 25.4%
Replacement Appliances 9,219 12.4% 9,985 12.9%
Total Revenue $ 74,505 100.0% $ 77,457 100.0%

39 Weeks Ended 39 Weeks Ended
September 30, 2017 October 1, 2016
Gross Gross Gross Gross
Profit Profit % Profit Profit %
Gross Profit
Retail Boxed $ 5,940 20.9% $ 8,693 27.9%
Retail UnBoxed 5,746 43.5% 4,445 31.7%
Retail Delivery (63 ) -6.6% (1,643 ) -209.0%
Retail Service, Parts & Accessories (266 ) -38.9% 1,000 89.2%
Extended Warranties, net 1,080 100.0% 652 100.0%
Recycling, Byproducts, Carbon Offset 7,535 36.0% 4,495 22.8%
Replacement Appliances 3,199 34.7% 3,436 34.4%
Total Gross Profit $ 23,171 31.1% $ 21,078 27.2%

~~Revenue~~

~~Revenue decreased $2,952 or 3.8% for the 39 weeks ended September 30, 2017 as compared to the 39 weeks ended October 1, 2016.~~

~~Revenue decreased in the following categories as compared to the prior year period:~~

~~Retail Boxed $2,763 or 8.9%, Retail Unboxed $836 or 6.0%, Retail Service, Parts and Accessories $437 or 39.0% and Replacement Appliances $766 or 7.7%.~~

~~The revenue decreases were partially offset by the following increases in revenue as compared to the prior year period:~~

~~Retail Delivery $173 or 22.0%, Extended Warranties, net $428 or 65.6% and Recycling, Byproducts, Carbon Offset $1,249 or 6.3%.~~

~~Cost of Revenue~~

Cost of revenue decreased $5,045, or 8.9% for the 39 weeks ended September 30, 2017 as compared to the 39 weeks ended October 1, 2016, primarily as a result of the change in revenue discussed above as well as the changes in gross profit discussed below.

~~Gross Profit~~

~~Gross profit increased $2,093 or 9.9%, for the 39 weeks ended September 30, 2017 as compared to the 39 weeks ended October 1, 2016.~~

~~Gross profit increased in the following categories as compared to the prior year period:~~

~~Retail UnBoxed $1,301 or 29.3%, Retail Delivery $1,580, Extended Warranties, net $428 or 65.6% and Recycling, Byproducts, Carbon Offset $3,040 or 67.6%.~~

~~Gross profit increases were partially offset by the following decreases in gross profit as compared to the prior year period.~~

~~Retail Boxed $2,753 or 31.7%, Retail Service, Parts and Accessories $1,266 or (126.6%), and Replacement Appliances $237 or 6.9%.~~

Gross profit margin as a percentage of sales were improved for Retail UnBoxed 43.5% vs. 31.7%, Retail Delivery (6.6%) vs. -209.0%, Retail Service, Parts and Accessories (38.9%) vs. 89.2%, Recycling, Byproducts and Carbon Offset 36.0% vs. 22.8% and Replacement Appliances 34.7% vs. 34.4%.

~~Gross profit margin as a percentage of sales declined for Retail Boxed 20.9% vs. 27.9% and Retail Service, Parts and Accessories (38.9%) vs. 89.2%.~~

~~Selling, General and Administrative Expense~~

~~Selling, general and administrative expense decreased $376 or 1.7%, for the 39 weeks ended September 30, 2017 as compared to the 39 weeks ended October 1, 2016.~~

~~Operating Income~~

As a result of the factors described above, operating income of $2,004 for the 39 weeks ended September 30, 2017, represented an increase of $2,469 over the comparable prior year 39 week period of $(465).

~~Interest Expense, net~~

Interest expense net decreased $292 or 31.5%, for the 39 weeks ended September 30, 2017 as compared to the 39 weeks ended October 1, 2016 primarily due to decreased rates of interest paid and amounts borrowed.

~~Other Income and Expense~~

~~Other income and expense increased $5,404 for the 39 weeks ended September 30, 2017 as compared to the 39 weeks ended October 1, 2016, primarily due to the gain on sale of property of $5,163.~~

~~Provision for (benefit from) Income Taxes~~

We recorded a provision for income taxes of $2,382 for the 39 weeks ended September 30, 2017, compared with a provision of $438 in the same period of 2016. The provision for income taxes for the 39 weeks ended September 30, 2017, increased over the same period of 2016 by $1,944, primarily due to an increase in earnings from the disposition of our Compton California land and building.

~~Net Income~~

The factors described above and the gain from the sale of our Compton California land and building of $5,163 led to a net income of $5,041 for the 39 weeks ended September 30, 2017, an increase of $6,472 from a net loss of $1,431 for the 39 weeks ended October 1, 2016.

Segment Performance

We report our business in the following segments: ~~Retail, Recycling~~Biotechnology and ~~Technology.~~discontinued operations. We ~~identified these segments based on a combination of business type, customers serviced and how we divide management responsibility. Our~~expect revenues and profits for our biotechnology segment to be driven by the development of pharmaceuticals that treat the root cause of pain but are ~~driven through~~non-opioid painkillers. We include Corporate expenses within the Biotechnology segment. As discussed above, we sold our ~~physical stores, our recycling centers, e-commerce, individual sales reps~~Technology segment, GeoTraq, during the fiscal year ended December 31, 2022, and our ~~internet services.~~Recycling segment in March 2023, and detail those results as discontinued operations below.

Operating ~~income (loss)~~loss by operating segment, is defined as ~~income (loss)~~loss before net interest expense, other income and expense, provision for income taxes ($000’s).


	13 Weeks Ended April 1, 2023									13 Weeks Ended April 2, 2022
	Biotechnology			Discontinued Operations			Total			Biotechnology			Discontinued Operations			Total
Revenue	$	—		$	3,795		$	3,795		$	—		$	9,324		$	9,324
Cost of revenue		—			3,992			3,992			—			7,471			7,471
Gross profit		—			(197	)		(197	)		—			1,853			1,853
Selling, general and administrative expense		1,099			(14,355	)		(13,256	)		681			2,263			2,944
Operating loss (income)	$	(1,099	)	$	14,158		$	13,059		$	(681	)	$	(410	)	$	(1,091	)

Biotechnology Segment

Our biotechnology segment incurred expenses of approximately $1.1 million and ~~income (loss) attributable~~$681,000 related to ~~non-controlling interest.~~employee costs and professional services related to research, and corporate services, as well as amortization of the Soin intangibles for the 13 weeks ended April 1, 2023 and the 13 weeks ended April 2, 2022, respectively.

Discontinued Operations

13 Weeks Ended September 30, 2017 13 Weeks Ended October 1, 2016
Segments in $ Segments in $
(in the thousands) Retail Recycling Technology Total Retail Recycling Technology Total
Revenue $ 13,678 $ 11,806 $ – $ 25,484 $ 15,102 $ 12,254 $ – $ 27,356
Cost of revenue 9,852 7,203 – 17,055 11,508 7,397 – 18,905
Gross profit 3,826 4,603 – 8,429 3,594 4,857 – 8,451
Selling, general and administrative expense 3,518 3,511 272 7,301 3,706 3,330 – 7,036
Operating income (loss) $ 308 $ 1,092 $ (272 ) $ 1,128 $ (112 ) $ 1,527 $ – $ 1,415

13 Weeks Ended September 30, 2017 13 Weeks Ended October 1, 2016
Segments in % Segments in %
Retail Recycling Technology Total Retail Recycling Technology Total
Revenue 100.0% 100.0% 0.0% 100.0% 100.0% 100.0% 0.0% 100.0%
Cost of revenue 72.0% 61.0% 0.0% 66.9% 76.2% 60.4% 0.0% 69.1%
Gross profit 28.0% 39.0% 0.0% 33.1% 23.8% 39.6% 0.0% 30.9%
Selling, general and administrative expense 25.7% 29.7% 100.0% 28.6% 24.5% 27.2% 0.0% 25.7%
Operating income (loss) 2.3% 9.2% -100.0% 4.4% -0.7% 12.5% 0.0% 5.2%

~~Retail Segment~~

~~Segment results for Retail include Appliancesmart.~~Discontinued operations consists of our Recycling segment, which was disposed of effective March 1, 2023, and our Technology segment, which was disposed of during May 2022. Revenue for the 13 weeks ended ~~September 30, 2017~~April 1, 2023, decreased ~~$1,424,~~by approximately $5.5 million, or ~~9.4%~~59.3%, as compared to the prior year period, which was primarily due to the disposition of our Recycling segment as ~~a result~~ of decreases in Retail Boxed $1,518 or 14.8%, Retail Service, Parts and Accessories $365 or 65.2%; partially offset by Extended Warranties, net $35 or 19.1%, Retail UnBoxed $186 or 4.5%, and Retail Delivery $238.March 1, 2023.

~~Cost of revenue~~Operating loss for the 13 weeks ended ~~September 30, 2017 decreased $1,656 or 14.4%,~~April 1, 2023, increased by approximately $1.3 million as compared to the prior year ~~period,~~period. The increase is primarily due to the disposition of our Recycling segment as of March 1, 2023.

Liquidity and Capital Resources

Overview

As of April 1, 2023, our cash on hand was $353,000. We intend to fund operations by using cash on hand, monthly revenues from the sale of our Subsidiaries, and funds received from approved ERC’s. We intend to raise funds to support future development of JAN 123 and JAN 101 either through capital raises or structured arrangements.

Our ability to continue as a ~~result~~going concern is dependent upon the success of ~~cost~~future capital raises or structured settlements to fund the required testing to obtain FDA approval of ~~revenue~~JAN 123 and JAN 101, as well as to fund our day-to-day operations. The accompanying financial statements do not include any adjustments that might be necessary should we be unable to continue as a ~~decrease in Retail UnBoxed $901 or 32.2% and Retail Delivery $1,130; partially offset by an increase in Retail Service, Parts and Accessories $324, and Retail Boxed $51.~~going concern. While we will actively pursue these additional sources of financing, management cannot make any assurances that such financing will be secured.

~~Operating income for~~Cash Flows

During the 13 weeks ended ~~September 30, 2017 increased $420, as compared to the prior year period, as a result of increased gross profit of $232 and decreased selling, general and administrative expense of $188.~~

~~Recycling Segment~~

Segment results for ARCA Recycling, Customer Connexx, ARCA Canada and AAP (through August 15, 2017). Revenue for the 13 weeks ended September 30, 2017 decreased by $448, or 3.7%, as compared to the prior year period, as a result of decreases in Replacement Appliances $555 or 14.8%; partially offset by Recycling, Byproducts, Carbon Offset Revenue of $107 or 1.3%.

Cost of revenue for the 13 weeks ended September 30, 2017 decreased $194 or 2.6%, as compared to the prior year period; as a result of an increase in Replacement Appliances $261 or 14.4%; partially offset by a decrease in cost of revenue of Recycling, Byproducts, Carbon Offset $455 or 8.1%.

Operating income for the 13 weeks ended September 30, 2017 decreased $435, as compared to the prior year period; as a result of decreased gross profit of $254; offset by increased selling, general and administrative expense of $181.

~~Technology Segment~~

Segment results for Technology include GeoTraq. Results for the 13 weeks ended September 30, 2017 include intangible asset amortization expense for $272. No prior year period results as this acquisition was completed August 18, 2017.

39 Weeks Ended September 30, 2017 39 Weeks Ended October 1, 2016
Segments in $ Segments in $
(in the thousands) Retail Recycling Technology Total Retail Recycling Technology Total
Revenue $ 44,334 $ 30,171 $ – $ 74,505 $ 47,769 $ 29,688 $ – $ 77,457
Cost of revenue 31,897 19,437 – 51,334 34,622 21,757 – 56,379
Gross profit 12,437 10,734 – 23,171 13,149 7,929 – 21,078
Selling, general and administrative expense 10,327 10,568 272 21,167 13,698 7,845 – 21,543
Operating income (loss) $ 2,110 $ 166 $ (272 ) $ 2,004 $ (549 ) $ 84 $ – $ (465 )

39 Weeks Ended September 30, 2017 39 Weeks Ended October 1, 2016
Segments in % Segments in %
Retail Recycling Technology Total Retail Recycling Technology Total
Revenue 100.0% 100.0% 0.0% 100.0% 100.0% 100.0% 0.0% 100.0%
Cost of revenue 71.9% 64.4% 0.0% 68.9% 72.5% 73.3% 0.0% 72.8%
Gross profit 28.1% 35.6% 0.0% 31.1% 27.5% 26.7% 0.0% 27.2%
Selling, general and administrative expense 23.3% 35.0% 100.0% 28.4% 28.7% 26.4% 0.0% 27.8%
Operating income (loss) 4.8% 0.6% -100.0% 2.7% -1.1% 0.3% 0.0% -0.6%

~~Retail Segment~~

Segment results for Retail include Appliancesmart. Revenue for the 39 weeks ended September 30, 2017 decreased $3,435, or 7.2%, as compared to the prior year period, as a result of decreases in Retail Boxed $2,763 or 8.9%, Retail UnBoxed $836 or 6.0%, Retail Service, Parts and Accessories $437 or 39.0%; partially offset by Extended Warranties, net $428 or 65.6%, and Retail Delivery $173 or 22.0%.

Cost of revenue for the 39 weeks ended September 30, 2017 decreased $2,725 or 7.9%, as compared to the prior year period, as a result of decreases in cost of revenue of Retail Boxed $10, Retail Unboxed $2,137 or 22.3%, Retail Delivery $1,407; partially offset by an increase in Retail Service, Parts and Accessories $829.

Operating income for the 39 weeks ended September 30, 2017 increased $2,659, as compared to the prior year period, as a result of decreased selling, general and administrative expense of $3,371 partially offset by a decrease in gross profit of $712.

~~Recycling Segment~~

Segment results for ARCA Recycling, Customer Connexx, ARCA Canada and AAP (through August 15, 2017). Revenue for the 39 weeks ended September 30, 2017 increased by $483, or 1.6%, as compared to the prior year period, as a result of increases in Recycling, Byproducts, Carbon Offset revenue of $1,249 or 6.3%; partially offset by a decrease in Replacement Appliance revenue $766 or 7.7%.

Cost of revenue for the 39 weeks ended September 30, 2017 decreased $2,320 or 10.7%, as compared to the prior year period; as a result of decreases in cost of revenue of Replacement Appliances $529 or 8.1% and Recycling, Byproducts, Carbon Offset $1,791 or 11.8%.

Operating income for the 39 weeks ended September 30, 2017 increased $82, as compared to the prior year period; as a result of increased gross profit of $2,805 partially offset by an increase in selling, general and administrative expense of $2,723.

~~Technology Segment~~

Segment results for Technology include GeoTraq. Results for the 39 weeks ended September 30, 2017 include intangible asset amortization expense for $272. No prior year period results as this acquisition was completed August 18, 2017.

~~Liquidity and Capital Resources~~

~~Overview~~

Based on our current operating plans, we believe that available cash balances, cash generated from our operating activities and funds available under (“the MidCap Revolver”), sale of assets and or other refinancing of existing indebtedness will provide sufficient liquidity to fund our operations, our continued investments in store openings and remodeling activities for at least the next 12 months. The Company refinanced and replaced the PNC Bank Revolver loan facility with the MidCap Revolver in May of 2017.

On September 20, 2017 the Company received a written default notice from MidCap Funding Trust X, the Agent representing the Lenders for the MidCap Revolver. The Company strongly disagrees with the Lenders that any Event of Default has occurred and is reserving all of its options with respect to the Loan Agreement. The Company and the Agent are in active discussions for forbearance and resolution of the default, however there can be no assurance the Company and the Agent will be able to agree on terms of the forbearance. The Company is classifying the Mid-Cap Revolver as a current liability until forbearance and resolution of the default is cured.

As of September 30, 2017, we had total cash on hand of $1,994 and an additional $3,616 of available borrowing under the MidCap Revolver. As we continue to pursue strategic transactions to expand and grow our business, we regularly monitor capital market conditions and may raise additional funds through borrowings or public or private sales of debt or equity securities. The amount, nature and timing of any borrowings or sales of debt or equity securities will depend on our operating performance and other circumstances; our then-current commitments and obligations; the amount, nature and timing of our capital requirements; any limitations imposed by our current credit arrangements; and overall market conditions.

~~Cash Flows~~

~~During the 39 weeks ended September 30, 2017,~~April 1, 2023, cash provided by operations was ~~$2,363,~~approximately $2.4 million, compared to cash provided by operations of ~~$3,719~~approximately $2.1 million during the 3913 weeks ended ~~October~~April 2, 2022. Cash provided by discontinued operations during the 13 weeks ended April 1, ~~2016. The decrease in~~2023 was approximately $2.3 million, while cash provided by continuing operations ~~of $1,356 as compared to the prior year period;~~was approximately $106,000. The increase in cash was primarily due to ~~a decrease~~results of operations as discussed above.

Cash used in cash provided by stock compensation expense of $232, change in reserve for inventory obsolescence of $124, gain on sale of property of $5,163, gain on sale of and deconsolidation of variable interest entity AAP of $81; partially offset by non-cash depreciation and amortization of $118, amortization of debt issuance costs of $126, change in reserve for uncollectible accounts $7, change in deferred income taxes of $337 and change in other of $716. Change in net income represented a positive change in operating cash flow of $6,221 offset by uses of cash in working capital accounts of $3,281.

~~Cash provided by~~ investing activities was ~~$6,323~~approximately $156,000 and $127,000, respectively, for the 13 weeks ended April 1, 2023 and the 13 weeks ended April 2, 2022. Cash used byin investing activities ~~$266~~ for the 3913 weeks ended ~~September 30, 2017~~April 1, 2023 was all associated with discontinued operations and was related to purchases of property and equipment. Cash used in investing activities for the 3913 weeks ended ~~October 1, 2016, respectively. The $6,589 increase in cash provided by investing activities, as compared~~April 2, 2022 was all associated with discontinued operations and related to ~~the prior period, is primarily attributable to the proceeds from the sale~~purchases of property and equipment and intangibles.

Cash used in financing activities was approximately $2.0 million for the 13 weeks ended April 1, 2023. Cash used in financing activities from discontinued operations for the 13 weeks ended April 1, 2023 was approximately $2.2 million and was primarily due to the repayment of ~~$6,785~~debt obligations. Cash provided financing activities from continued operations for the 13 weeks ended April 1, 2023 was approximately $163,000 and ~~a decrease~~was related to $368,000 in ~~purchase of property and equipment of $137,~~ proceeds from equity financing, partially offset by $205,000 in debt repayments. Cash used in financing activities was approximately $279,000 for the ~~sale~~13 weeks ended April 2, 2022. Cash used in financing activities for the 13 weeks ended April 2, 2022 was approximately $63,000 and $216,000 from discontinued and continuing operations, respectively, and was primarily due to the repayment of ~~our equity investment~~debt obligations.

Sources of Liquidity

We continue to face a challenging competitive environment as we continue to focus on raising capital and managing expenses. We reported a net loss of approximately $662,000 from continuing operations in ~~AAP~~for the 13 weeks ended April 1, 2023, and net income from continuing operations of ~~$800 less cash retained by AAP~~approximately $2.6 million for the 13 weeks ended April 2, 2022 primarily due to a gain on litigation settlement of ~~$157~~approximately $2.0 million, gain on reversal of a contingency loss of $637,000, and other income, net of ~~$22;~~$715,0000, partially offset by an ~~increase~~operating loss of $681,000. Additionally, the Company has total current assets of approximately $637,000 and total current liabilities of approximately $3.5 million resulting in ~~restricted cash~~a net negative working capital of ~~$798, and cash $200 used to purchase an intangible asset (GeoTraq) net of debt and Series A preferred stock issued.~~approximately $2.8 million. Cash provided by continuing operations was approximately $106,000.

Cash used by financing activities was $7,675 and $3,705 for the 39 weeks ended September 30, 2017 and the 39 weeks ended October 1, 2016, respectively. The $3,970 increase in cash used, as compared to the prior period, was attributable to increased payments under the PNC Revolver of $7,474, debt obligations of $723 and debt issuance costs $359; partially offset by an increase in the proceeds from the issuance of debt obligations of $970 and an increase in net borrowing under the MidCap Revolver of $3,616.

~~Sources of Liquidity~~

We utilize cash on hand and cash generated from operations and have funds available to us under our revolving loan facility with MidCap Financial Trust to cover normal and seasonal fluctuations in cash flows and to support our various growth initiatives. Our cash and cash equivalents are carried at cost and consist primarily of demand deposits with commercial banks.

~~MidCap Revolver~~

Future Sources of Cash; Phase 2b Trials, New Acquisitions, Products, and Services

We may require additional debt financing and/or capital to finance new acquisitions, ~~refinance existing indebtedness~~conduct our Phase IIb clinical trials, or consummate other strategic investments in our business. ~~Other sources of financing may include stock issuances and additional loans; or other forms of financing. Any~~No assurance can be given any financing obtained may not further dilute or otherwise impair the ownership interest of our existing stockholders.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market Risk and Impact of Inflation

~~Foreign Currency Exchange~~Interest Rate ~~Risk.~~ We currently generate revenues in Canada. The reporting currency for our consolidated financial statements is U.S. dollars. It is not possible to determine the exact impact of foreign currency exchange rate changes; however, the effect on reported revenue and net earnings can be estimated. We estimate that the U.S. dollar against the Canadian dollar had an immaterial impact on revenues and net income for the 13 Week and 39 Week periods ended September 30, 2017.Risk. We do not ~~currently hedge foreign currency~~believe there is any significant risk related to interest rate fluctuations on our short and ~~do not intend to do so for the foreseeable future.~~long-term fixed rate debt.

We do not hold any derivative financial instruments, nor do we hold any securities for trading or speculative purposes.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Evaluation of Disclosure control and Procedures. We ~~have established disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit~~carried out an evaluation, under the ~~Exchange Act is recorded, processed, summarized~~supervision and ~~reported within~~with the ~~time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to~~participation of our management, including our ~~Chief Executive Officer (principal~~principal executive ~~officer)~~officer and ~~Chief Financial Officer (principal~~principal financial ~~officer), to allow timely decisions regarding required disclosure.~~

~~Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated~~officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) ~~promulgated~~) to ensure that information required to be disclosed in reports filed under the Securities Exchange ~~Act), at September 30, 2017.~~ Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Based onupon that evaluation, our ~~Chief Executive Officer~~principal executive officer and ~~Chief Financial Officer~~principal financial officer concluded that, ~~at September 30, 2017,~~as of April 1, 2023, the period covered in this report, our disclosure controls and procedures were ~~effective.~~not effective because of the material weaknesses discussed below.

~~Changes~~In light of the conclusion that our internal disclosure controls are ineffective as of April 1, 2023, we have applied procedures and processes as necessary to ensure the reliability of our financial reporting in regard to this annual report. Accordingly, the Company believes, based on its knowledge, that: (i) this annual report does not contain any untrue statement of a material fact or omit a material fact; and (ii) the financial statements, and other financial information included in this annual report, fairly present in all material respects our financial condition, results of operations and cash flows as of and for the periods presented in this annual report.

Management’s Report on Internal Control ~~over~~Over Financial Reporting

~~During the second~~. Our management is responsible for establishing and ~~third quarters of fiscal 2017, covered by this Quarterly Report on Form 10-Q, we made certain changes to our~~maintaining adequate internal control over financial reporting (as defined in ~~Rule~~Exchange Act Rules 13a-15(f) ~~under~~and 15d-15(f)). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the ~~Exchange Act). We have upgraded to a new accounting system and improved our control structure by adding and making~~risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of April 1, 2023. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in 2013 regarding Internal Control – Integrated Framework. Based on our assessment using those criteria, our management concluded that our internal control over financial reporting was not effective as of April 1, 2023.

Management noted material weaknesses in internal control when conducting their evaluation of internal control as of April 1, 2023. (1) Insufficient information technology general controls and segregation of duties. (2) inadequate control design or lack of sufficient controls over significant accounting processes; (3) insufficient assessment of the impact of potentially significant transactions; and (4) insufficient processes and procedures related to proper recordkeeping of agreements and contracts.

These material weaknesses remained outstanding as of the filing date of this Form 10-K and management is currently working to remedy these outstanding material weaknesses.

The Company’s management, including the Company’s CEO and ~~staff for each subsidiary company. We~~CFO, do not ~~believe this has~~expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting will prevent or detect all error and all fraud. A control system, regardless of how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met. These inherent limitations include the following: judgements in decision-making can be faulty, and control and process breakdowns can occur because of simple errors or mistakes, controls can be circumvented by individuals, acting alone or in collusion with each other, or by management override, the design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Changes in Internal Control Over Financial Reporting. There were no changes in the Company’s internal control over financial reporting during the fiscal year ended April 1, 2023 that have materially affected, or isare reasonably likely to materially affect, ~~our~~the Company’s internal control over financial reporting.

PART II. Other Information

Item 1. Legal Proceedings

~~On November 6, 2015, a complaint was filed~~The information in ~~the Minnesota District Court for Hennepin County, Minnesota, by David Gray~~response to this item is included in Note 15, Commitments and Michael Boller, purporting to bring suit derivatively on behalf of the Company against twelve current and former officers and directors of the Company. The complaint alleged that the defendants breached their fiduciary dutiesContingencies, to the ~~Company, and that the defendants have been unjustly enriched as a result thereof. The complaint sought damages, disgorgement, an award~~Consolidated Financial Statements included in Part I, Item 1, of attorneys’ fees and other expenses, and an order compelling changes to the Company’s corporate governance and internal procedures. The Company and the other defendants vigorously denied plaintiffs’ allegations, and have not admitted any liability or wrongdoing as part of the settlement. The court made no findings or determinations with respect to the merit of plaintiffs’ claims, and no payment is being made by the Company or the other defendants. The parties have reached a settlement that fully resolves plaintiffs’ claims and provides for the release of all claims asserted in the litigation. On August 2, 2017, the court entered an order granting preliminary approval of the settlement. On September 29, 2017, the court issued an order granting final approval of the settlement. As a condition of the settlement, the Company has agreed to provide certain training to employees in the Company’s accounting department within one year of the settlement. The court also granted an application by plaintiffs’ counsel for attorneys’ fees, to be paid by the Company’s insurance carrier. Other than this ~~award of attorneys’ fees, no payment or other consideration was paid by the Company nor its officers or directors in connection with the settlement.~~Form 10-Q.

In February 2012, various individuals commenced a class action lawsuit against Whirlpool Corporation (“Whirlpool”) and various distributors of Whirlpool products, including Sears, The Home Depot, Lowe’s and us, alleging certain appliances Whirlpool sold through its distribution chain, which includes us, were improperly designated with the ENERGY STAR® qualification rating established by the U.S. Department of Energy and the Environmental Protection Agency. The claims against us include breach of warranty claims, as well as various state consumer protection claims. The amount of the claim is, as yet, undetermined. Whirlpool has offered to fully indemnify and defend its distributors in this lawsuit, including us, and has engaged legal counsel to defend itself and the distributors. We are monitoring Whirlpool’s defense of the claims and believe the possibility of a material loss is remote.

AMTIM Capital Inc. (“AMTIM”) provided management and sales services in respect of our recycling services in Canada, and was paid pursuant to agreements between AMTIM and us. A dispute arose between AMTIM and us with respect to the calculation of amounts due to AMTIM pursuant to the agreements. In a lawsuit filed in the province of Ontario on March 29, 2011, AMTIM claimed a discrepancy in the calculation of fees due to AMTIM by us in excess of $1.6 million. On December 9, 2011 the United States District Court for the District of Minnesota issued a declaratory default judgment to the effect that our method of calculating of the amounts due to AMTIM is correct. Although the Ontario action continues, and its outcome is uncertain, we believe that no further amounts are due under the terms of these agreements and we will continue to defend our position relative to this lawsuit.

On December 29, 2016, ARCA served a Minnesota state court complaint for breach of contract on Skybridge Americas, Inc. (“SA”), ARCA’s primary call center vendor throughout 2015 and most of 2016. ARCA seeks damages in the millions of dollars as a result of alleged overcharging by SA and lost client contracts. On January 25, 2017, SA served a counterclaim for unpaid invoices in the amount of approximately $460,000 plus interest and attorneys’ fees. On March 29, 2017, the Hennepin County district court dismissed ARCA’s claim based on the currency differential between the United States and Canada, but permitted ARCA’s remaining claims to proceed. The parties are currently conducting discovery. On October 24, 2017, ARCA filed a motion for partial summary judgment. ARCA intends to vigorously dispute SA’s counterclaims.

On November 15, 2016, ARCA served an arbitration demand on Haier US Appliance Solutions, Inc, dba GE Appliances (“GEA”), alleging breach of contract and interference with prospective business advantage. ARCA seeks over $2 million in damages. On April 18, 2017, GEA served a counterclaim for approximately $337,000 in alleged obligation under the parties’ recycling agreement. Simultaneously with serving its counterclaim in the arbitration, which is venued in Chicago, GEA filed a complaint in the United States District Court for the Western District of Kentucky seeking damages of approximately $530,000 plus interest and attorneys’ fees allegedly owed under a previous agreement between the parties. On May 31, 2017, ARCA moved to dismiss or stay the Kentucky lawsuit in favor of the pending arbitration. ARCA’s motions have not been ruled upon. Under the terms of ARCA’s transaction with Recleim LLC, Recleim LLC is obligated to pay GEA on ARCA’s behalf the amounts claimed by GEA in the arbitration and in the lawsuit pending in Kentucky.

~~We are party from time to time to ordinary course disputes that we do not believe to be material or have merit. We intend to vigorously defend ourselves against these ordinary course disputes.~~

Item 1A. Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item. However, in light of the SEC Complaint, the Company provides the following additional risk factors, which supplements the risk factors previously disclosed by the Company in Part I, Item 1A, Risk Factors, of the 2020 10-K.

We are the subject of an SECComplaint, which could divert management's focus, result in substantial litigation expenses and have an adverse impact on our business, reputation, financial condition, results of operations or stock price.

We are currently subject to an SECComplaint. Refer to Note 15 to our Consolidated Financial Statements and Part II, Item 1 of this Quarterly Report for additional information regarding this specific matter. We may be subject to additional investigations, arbitration proceedings, audits, regulatory inquiries and similar actions, including matters related to intellectual property, employment, securities laws, disclosures, tax, accounting, class action and product liability, as well as regulatory and other claims related to our business and our industry, which we refer to collectively as legal proceedings. We cannot predict the outcome of any particular proceeding, or whether ongoing investigations, will be resolved favorably or ultimately result in charges or material damages, fines or other penalties, enforcement actions, bars against serving as an officer or director, or practicing before the SEC, or civil or criminal proceedings against us or members of our senior management.

Legal proceedings in general, and securities and class action litigation and regulatory investigations in particular, can be expensive and disruptive. Our insurance may not cover all claims that may be asserted against us, and we are unable to predict how long the legal proceedings to which we are currently subject will continue. An unfavorable outcome of any legal proceeding may have an adverse impact on our business, financial condition and results of operations or our stock price. Any proceeding could negatively impact our reputation among our stakeholders. Furthermore, publicity surrounding ongoing legal proceedings, even if resolved favorably for us, could result in additional legal proceedings against us, as well as damage our image.

We may not be able to maintain compliance with the continued listing requirements of The Nasdaq Capital Market.

Our common stock is listed on The Nasdaq Capital Market. In order to maintain that listing, we must satisfy minimum financial and other requirements including, without limitation, a requirement that our closing bid price be at least $1.00 per share. If we fail to continue to meet all applicable continued listing requirements for The Nasdaq Global Market in the future and Nasdaq determines to delist our common stock, the delisting could adversely affect the market liquidity of our common stock, our ability to obtain financing to repay debt, and fund our operations.

Item 2. Unregistered Sales of Equity Securities and Use of funds

None.

Item 3. Defaults Upon Senior Securities

None.

On September 20, 2017, Appliance Recycling Centers of America, Inc. (the “Company”) received a written notice of default, dated September 20, 2017 (the “Notice of Default”), from MidCap Funding X Trust (the “Agent”), asserting that events of default had occurred with respect to that certain Credit and Security Agreement dated May 10, 2017 (the “Loan Agreement”), by and among the Agent and certain other Lenders (the “Lenders”), and the Company and certain of its subsidiaries (the “Borrowers”). The Agent alleges in the Notice of Default that, as a result of the Company’s recent acquisition of GeoTraq Inc. (“GeoTraq”), and the issuance of promissory notes to the stockholders of GeoTraq in connection with such acquisition, the Borrowers have failed to comply with certain terms of the Loan Agreement, and that such failure constitutes one or more Events of Default under the Loan Agreement. Specifically, the Notice of Default states that as a result of the acquisition and related issuance of promissory notes, the Borrowers have failed to comply with (i) a covenant not to incur additional indebtedness other than Permitted Debt (as defined in the Loan Agreement), without the Agent’s prior written consent, and a covenant not to make acquisitions or investments other than Permitted Acquisitions or Permitted Investments (as defined in the Loan Agreement). The Notice of Default also states that the Borrowers’ failure to pledge the stock in GeoTraq as collateral under the Loan Agreement and to make GeoTraq a “Borrower “under the Loan Agreement will become an Event of Default if not cured within the applicable cure period. The Agent has reserved the right to avail itself of any other rights and remedies available to it at law or by contract, including the right to (a) withhold funding, increase reserves and suspend making further advances under the Loan Agreement, (b) declare all principal, interest and other sums owing in connection with the Loan Agreement immediately due and payable in full, (c) charge the Default Rate on amounts outstanding under the Loan Agreement, and/or (d) exercise one or more rights and remedies with respect to any and all collateral securing the Loan Agreement. The Agent has not declared the amounts outstanding under the Loan Agreement to be immediately due and payable but has imposed the default rate of interest, which is 5% in excess of the rates otherwise payable under the Loan Agreement), effective as of August 18, 2017 and continuing until the Agent notifies the Borrowers that the specified Events of Default have been waived and no other Events of Default exist.Item 4. Mine Safety Disclosures

None.

The Company strongly disagrees with the Lenders that any Event of Default has occurred and is reserving all of its options with respect to the Loan Agreement. The Company and the Agent are in active discussions for forbearance and resolution of the default, however there can be no assurance the Company and the Agent will be able to agree on terms of the forbearance.Item 5. Other Information.

None.

Item 6. Exhibits.

Index to Exhibits

Exhibit
Number
Exhibit Description Form File Number Exhibit Number Filing Date
3.1 Restated Articles of Incorporation of Appliance Recycling Centers of America, Inc. 10-K 000-19621 3.1 03/31/17

3.2 * Certificate of Correction of Appliance Recycling Centers of America, Inc.

3.3 Bylaws of Appliance Recycling Centers of America, Inc. 8-K 000-19621 3.2 01/03/08

31.1 * Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 * Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 † Certification of the President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 † Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101 ** The following materials from our Quarterly Report on Form 10-Q for the three-month period ended September 30, 2017 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) the Consolidated Statements of Cash Flows, (iv) the Notes to Consolidated Financial Statements, and (v) document and entity information.


Exhibit Number		Exhibit Description	Form	File Number	Exhibit Number	Filing Date
10.96		Stock Purchase Agreement between JanOne Inc. and VM7 Corporation, dated as of March 19, 2023 (Filed as Exhibit 10.95)	8-K	0-19621	10.95	3/20/2023

10.97		Stock and Membership Interests Pledge Agreement made by VM7 Corporation and Virland Johnson in favor of JanOne Inc., dated March 19, 2023 (Filed as Exhibit 10.96)	8-K	0-19621	10.96	3/20/2023

10.98		Form of Securities Purchase Agreement dated March 22, 2023.	8-K	0-19621	10.98	3/22/2023

31.1	*	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	*	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	*	Certification of the President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	*	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS	*	Inline XBRL Instance Document

101.SCH	*	Inline XBRL Taxonomy Extension Schema Document

101.CAL	*	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	*	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	*	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE	*	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

* Filed herewith.

~~† Furnished herewith.~~31

SIGNATURES

** Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed part of a registration statement, prospectus or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filings.

~~SIGNATURES~~

Pursuant to the requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on our behalf by the undersigned, thereunto duly authorized.

		~~Appliance Recycling Centers of America, Inc.~~
		~~(Registrant)~~ JanOne Inc.
				(Registrant)
~~Date:~~	~~November 14, 2017~~	~~By:~~
Date:	May 22, 2023	By:	/s/ Tony Isaac
			Tony Isaac
			Chief Executive Officer
			(Principal Executive Officer)


Date:	~~November 14, 2017~~ May 22, 2023	By:	/s/ Virland AA. Johnson
			Virland AA. Johnson
			Chief Financial Officer
			(Principal Financial and Accounting Officer)


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

~~175 Jackson Avenue North~~ 325 E. Warm Springs Road, Suite 102 ~~Minneapolis, Minnesota~~ Las Vegas, Nevada (Address of principal executive offices)		~~55343~~89119 (Zip Code)


	April 1, 2023			December 31, 2022
	(Unaudited)
Assets
Cash and cash equivalents	$	353		$	61
Trade and other receivables, net		15			106
Prepaid expenses and other current assets		269			394
Current assets from discontinued operations		—			8,612
Total current assets		637			9,173
Intangible assets - Soin, net		18,930			19,293
Other intangible assets, net		4			4
Note receivable- SPYR, net		9,175			8,974
Note receivable - VM7, net		6,052			—
Marketable securities		162			315
Deposits and other assets		16			18
Other assets from discontinued operations		—			8,979
Total assets	$	34,976		$	46,756
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable	$	2,664		$	2,276
Accrued liabilities - other		744			1,006
Short–term debt		69			274
Current liabilities from discontinued operations		—			20,382
Total current liabilities		3,477			23,938
Deferred income taxes, net		3,153			—
Other noncurrent liabilities		276			241
Noncurrent liabilities from discontinued operations		—			5,760
Total liabilities		6,906			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 April 1, 2023 and December 31, 2022, respectively		14,510			14,510
Stockholders' equity:
Preferred stock, series A - par value $0.001 per share 2,000,000 authorized, �� 222,588 and 222,588 shares issued and outstanding at April 1, 2023 and December 31, 2022, respectively		—			—
Common stock, par value $0.001 per share, 10,000,000 shares authorized, 3,614,937 and 2,827,410 shares issued and outstanding at April 1, 2023 and at December 31, 2022, respectively		3			2
Additional paid-in capital		46,294			45,748
Accumulated deficit		(32,737	)		(42,822	)
Accumulated other comprehensive loss		—			(621	)
Total stockholders' equity		13,560			2,307
Total liabilities and stockholders' equity	$	34,976		$	46,756

	39 Weeks Ended
	September 30, 2017			October 1, 2016
OPERATING ACTIVITIES:
Net income (loss)	$	4,545		$	(1,676	)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		1,054			936
Amortization of debt issuance costs		262			136
Stock based compensation expense		32			264
Gain on sale of property		(5,163	)		–
Gain on sale and deconsolidation of variable interest entity AAP		(81	)		–
Change in reserve for uncollectible accounts		7			–
Change in reserve for inventory obsolescence		(124	)		–
Change in deferred income taxes		776			439
Other		679			(37	)
Changes in assets and liabilities:
Accounts receivable		(1,531	)		2,004
Prepaid expenses and other current assets		(254	)		108
Inventories		5,073			385
Accounts payable and accrued expenses		(4,509	)		301
Income tax payable		1,597			859

Net cash provided by operating activities		2,363			3,719

INVESTING ACTIVITIES:
Purchases of property and equipment		(107	)		(244	)
Proceeds from sale of property and equipment, net		6,785			–
Purchase of intangible asset, GeoTraq Inc, net of debt and Series A preferred stock issued		(200	)		–
Proceeds from sale of equity in AAP less cash retained by AAP as a result of deconsolidation		643			–
Increase in restricted cash		(798	)		–
Other		–			(22	)

Net cash provided by (used) in investing activities		6,323			(266	)

FINANCING ACTIVITIES:
Net payments under line of credit - PNC Bank		(10,333	)		(2,859	)
Net borrowing under the line of credit - MidCap Financial Trust		3,616			–
Proceeds from issuance of debt obligations		1,070			100
Payment of debt issuance costs		(484	)		(125	)
Payments on debt obligations		(1,544	)		(821	)
Net cash used in financing activities		(7,675	)		(3,705	)

Effect of changes in exchange rate on cash and cash equivalents		15			(8	)

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		1,026			(260	)

CASH AND CASH EQUIVALENTS, beginning of period		968			1,969

CASH AND CASH EQUIVALENTS, end of period	$	1,994		$	1,709

Supplemental cash flow disclosures:
Interest paid	$	386		$	1,033
Income taxes refunded (paid)	$	48		$	860
Noncash financing and investing activities:
Notes payable issued to sellers of GeoTraq, Inc. (See Note 5)	$	800		$	–
Series A convertible preferred stock issued for the acquisition of GeoTraq, Inc. (See Note 5)	$	14,963		$	–
Debt issuance costs related to credit agreement renewal	$	–		$	63


Large accelerated filero			Accelerated filero	
	Non-accelerated filero	☒		Smaller reporting companyx	☒
	Emerging growth companyo	

		~~Page~~
		Page
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements	2 3

	Unaudited Condensed Consolidated Balance Sheets as of ~~September 30, 2017 (Unaudited)~~April 1, 2023 and December 31, ~~2016~~2022	2 3

	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income ~~(Loss)~~ for the 13 weeks ended ~~September 30, 2017~~April 1, 2023 and ~~October 1, 2016 and for the 39 weeks ended September 30, 2017 and October 1, 2016~~April 2, 2022	3 4

	Unaudited Condensed Consolidated Statements of Cash Flows for the 3913 weeks ended ~~September 30, 2017~~April 1, 2023 and ~~October 1, 2016~~April 2, 2022	4 5

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

	Notes to Unaudited Condensed Consolidated Financial Statements	5 7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18 25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27 28

Item 4.	Controls and Procedures	28

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	29 30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 3.	Defaults Upon Senior Securities	30

Item 6.4.	~~Exhibits~~Mine Safety Disclosures	31 30

~~SIGNATURES~~ Item 5	Other Information	30

Item 6.	Exhibits	31

SIGNATURES		32

	September 30,			December 31,
	2017			2016
	(Unaudited)

Assets
Cash and cash equivalents	$	1,994		$	968
Trade and other receivables, net		11,991			10,509
Inventories, net		11,219			16,291
Income tax receivable		–			16
Prepaid expenses and other current assets		891			761
Total current assets		26,095			28,545

Property and equipment, net		994			10,116
Restricted cash		1,298			500
Intangible assets, net		15,748			57
Deposits and other assets		751			557
Deferred taxes		1,305			2,081
Total assets	$	46,191		$	41,856

Liabilities and Stockholders' Equity
Liabilities:
Accounts payable	$	2,592		$	6,143
Accrued liabilities		6,227			8,888
Line of credit PNC bank		–			10,333
Notes payable - short term		800			–
Accrued income taxes		1,581			–
Current portion of long term maturities		3,846			2,093
Total current liabilities		15,046			27,457

Long term obligations, less current maturities		–			2,826
Other noncurrent liabilities		307			364
Total liabilities		15,353			30,647


Stockholders' equity:
Preferred stock, series A, 288,588 shares authorized, issued and outstanding at September 30, 2017		14,963			–
Common stock, no par value, 50,000 shares authorized, 6,655 shares issued and outstanding at September 30, 2017 and December 31, 2016		22,437			22,405
Accumulated deficit		(5,987	)		(11,028	)
Accumulated other comprehensive loss		(575	)		(574	)
Total stockholders' equity		30,838			10,803
Non controlling interest		–			406
Total liabilities and equity	$	46,191		$	41,856


	For the Thirteen Weeks Ended
	April 1, 2023			April 2, 2022
Revenues	$	—		$	—
Cost of revenues		—			—
Gross profit		—			—
Operating expenses:
Selling, general and administrative expenses		1,099			681
Operating loss		(1,099	)		(681	)
Other income (expense):
Interest income (expense), net		475			(2	)
Gain on litigation settlement, net		—			1,950
Unrealized loss on marketable securities		(247	)		—
Gain on reversal of contingency loss		—			637
Other income, net		(18	)		715
Total other income, net		210			3,300
Income (loss) from continuing operations before provision for income taxes		(889	)		2,619
Income tax benefit		(227	)		—
Net income (loss) from continuing operations		(662	)		2,619
Gain (loss) from discontinued operations (including a $15.8 million gain on sale)		13,976			(1,405	)
Income tax provision for discontinued operations		3,229			3
Net income (loss) from discontinued operations		10,747			(1,408	)
Net income	$	10,085		$	1,211
Net income (loss) per share:
Net income (loss) per share from continuing operations, basic	$	(0.21	)	$	0.93
Net income (loss) per share from continuing operations, diluted	$	(0.21	)	$	0.80
Net income (loss) per share from discontinued operations, basic	$	3.36		$	(0.50	)
Net income (loss) per share from discontinued operations, diluted	$	3.36		$	(0.43	)
Net income per share, basic	$	3.15		$	0.43
Net income per share, basic	$	3.15		$	0.37
Weighted average common shares outstanding:
Basic		3,199,061			2,827,410
Diluted		3,199,061			3,274,123

	13 Weeks Ended						39 Weeks Ended
	September 30, 2017			October 1, 2016			September 30, 2017			October 1, 2016


Revenues	$	25,484		$	27,356		$	74,505		$	77,457
Cost of revenues		17,055			18,905			51,334			56,379
Gross profit		8,429			8,451			23,171			21,078

Operating expenses:
Selling, general and administrative expenses		7,301			7,036			21,167			21,543
Operating income (loss)		1,128			1,415			2,004			(465	)
Other income (expense):
Gain on the sale of Compton Facility		–			–			5,163			–
Gain on the sale of AAP equity interest		81			–			81			–
Interest expense, net		(207	)		(341	)		(636	)		(928	)
Other income (expense)		248			61			315			155
Total other income (expense), net		122			(280	)		4,923			(773	)
Income (loss) before provision for income taxes		1,250			1,135			6,927			(1,238	)
Total provision (benefit) for income taxes		563			–			2,382			438
Net income (loss)		687			1,135			4,545			(1,676	)
Net loss attributed to noncontrolling interest		83			(12	)		496			245
Net income (loss) attributed to shareholders' of the parent	$	770		$	1,123		$	5,041		$	(1,431	)

Earnings (loss) per share:
Basic	$	0.12		$	0.19		$	0.76		$	(0.24	)
Diluted	$	0.11		$	0.19		$	0.75		$	(0.24	)

Weighted average common shares outstanding:
Basic		6,655			5,991			6,655			5,940
Diluted		6,705			5,991			6,705			5,940


Net income (loss)	$	687		$	1,135		$	4,545		$	(1,676	)
Other comprehensive income (loss), net of tax
Effect of foreign currency translation adjustments		(37	)		(29	)		(1	)		14
Total other comprehensive income (loss), net of tax		(37	)		(29	)		(1	)		14
Comprehensive income (loss)		650			1,106			4,544			(1,662	)
Comprehensive loss attributable to noncontrolling interest		83			(12	)		496			245
Comprehensive income (loss) attributable to shareholders' of the parent	$	733		$	1,094		$	5,040		$	(1,417	)


	Series A Preferred				Common Stock				Additional Paid-in		Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit			Equity
Balance, December 31, 2022		222,588	$	—		3,150,230	$	2	$	45,748	$	(42,822	)	$	(621	)	$	2,307
Share based compensation		—		—		—		—		8		—			—			8
Common stock issued for equity financing		—		—		361,000		1		368		—			—			369
Common stock issued for legal settlement						103,707		—		170		—			—			170
Other comprehensive income		—		—		—		—		—		—			621			621
Net income		—		—		—		—		—		10,085			—			10,085
Balance, April 1, 2023		222,588	$	—		3,614,937	$	3	$	46,294	$	(32,737	)	$	—		$	13,560

	September 30, 2017		December 31, 2016
Appliances held for resale	$	11,219	$	16,146
Processed metals from recycled appliances held for resale		–		139
Other		–		6
	$	11,219	$	16,291

Assets		December 31, 2016
Current assets	$	438
Property and equipment, net		7,322
Other assets		83
Total assets	$	7,843
Liabilities
Accounts payable	$	1,388
Accrued expenses		523
Current maturities of long-term debt obligations		3,558
Long-term debt obligations, net of current maturities		435
Other liabilities (a)		1,126
Total liabilities	$	7,030

	13 Weeks Ended
	September 30, 2017 (b)			October 1, 2016
Revenues	$	306		$	2,076
Gross profit		38			492
Operating income (loss)		(140	)		79
Net income (loss)		(165	)		24

	Useful Life (Years)	September 30, 2017			December 31, 2016
Land		$	–		$	1,140
Buildings and improvements	18-30		2,122			3,780
Equipment (including computer software)	3-15		7,897			19,260
Projects under construction			73			204
Property and equipment			10,092			24,384
Less accumulated depreciation and amortization			(9,098	)		(14,268	)
Property and equipment, net		$	994		$	10,116

	September 30, 2017		December 31, 2016
Intangible assets GeoTraq, net (See Note 5)	$	15,691	$	–
Recycling contract, net		19		19
Goodwill		38		38
	$	15,748	$	57

	September 30, 2017		December 31, 2016
Deposits	$	600	$	453
Other		151		104
	$	751	$	557

	September 30, 2017		December 31, 2016
Sales tax estimates, including interest	$	4,610	$	4,203
Compensation and benefits		741		2,431
Accrued incentive and rebate checks		192		358
Accrued rent		238		263
Warranty		14		26
Accrued payables		–		570
Deferred revenue		322		227
Other		110		810
	$	6,227	$	8,888

	September 30, 2017			December 31, 2016

PNC term loan	$	–		$	1,020
MidCap financial trust asset based revolving loan		3,616			–
AFCO Finance		639			–
Susquehanna term loans		–			3,242
GE 8% loan agreement		482			482
EEI note		103			103
PIDC 2.75% note, due in month installments of $3, including interest, due October 2024		–			287
Capital leases and other financing obligations		36			564
Debt issuance costs, net		(1,030	)		(779	)
Total debt obligations		3,846			4,919
Less current maturities		(3,846	)		(2,093	)
Long-term debt obligations, net of current maturities	$	–		$	2,826

	13 Weeks Ended September 30, 2017									13 Weeks Ended October 1, 2016
		Segments in $								Segments in $
(in the thousands)		Retail		Recycling		Technology			Total		Retail			Recycling		Technology		Total
Revenue	$	13,678	$	11,806	$	–		$	25,484	$	15,102		$	12,254	$	–	$	27,356
Cost of revenue		9,852		7,203		–			17,055		11,508			7,397		–		18,905
Gross profit		3,826		4,603		–			8,429		3,594			4,857		–		8,451
Selling, general and administrative expense		3,518		3,511		272			7,301		3,706			3,330		–		7,036
Operating income (loss)	$	308	$	1,092	$	(272	)	$	1,128	$	(112	)	$	1,527	$	–	$	1,415

		13 Weeks Ended September 30, 2017					13 Weeks Ended October 1, 2016
	Segments in %					Segments in %
		Retail	Recycling	Technology	Total		Retail	Recycling	Technology	Total
Revenue		100.0%	100.0%	0.0%	100.0%		100.0%	100.0%	0.0%	100.0%
Cost of revenue		72.0%	61.0%	0.0%	66.9%		76.2%	60.4%	0.0%	69.1%
Gross profit		28.0%	39.0%	0.0%	33.1%		23.8%	39.6%	0.0%	30.9%
Selling, general and administrative expense		25.7%	29.7%	100.0%	28.6%		24.5%	27.2%	0.0%	25.7%
Operating income (loss)		2.3%	9.2%	-100.0%	4.4%		-0.7%	12.5%	0.0%	5.2%

	39 Weeks Ended September 30, 2017									39 Weeks Ended October 1, 2016
		Segments in $								Segments in $
(in the thousands)		Retail		Recycling		Technology			Total		Retail			Recycling		Technology		Total
Revenue	$	44,334	$	30,171	$	–		$	74,505	$	47,769		$	29,688	$	–	$	77,457
Cost of revenue		31,897		19,437		–			51,334		34,622			21,757		–		56,379
Gross profit		12,437		10,734		–			23,171		13,149			7,929		–		21,078
Selling, general and administrative expense		10,327		10,568		272			21,167		13,698			7,845		–		21,543
Operating income (loss)	$	2,110	$	166	$	(272	)	$	2,004	$	(549	)	$	84	$	–	$	(465	)

		39 Weeks Ended September 30, 2017									39 Weeks Ended October 1, 2016
		Segments in %								Segments in %
		Retail		Recycling		Technology			Total		Retail			Recycling		Technology		Total
Revenue		100.0%		100.0%		0.0%			100.0%		100.0%			100.0%		0.0%		100.0%
Cost of revenue		71.9%		64.4%		0.0%			68.9%		72.5%			73.3%		0.0%		72.8%
Gross profit		28.1%		35.6%		0.0%			31.1%		27.5%			26.7%		0.0%		27.2%
Selling, general and administrative expense		23.3%		35.0%		100.0%			28.4%		28.7%			26.4%		0.0%		27.8%
Operating income (loss)		4.8%		0.6%		-100.0%			2.7%		-1.1%			0.3%		0.0%		-0.6%