10q10k10q10k.net

What changed in ALT5 Sigma Corp's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of ALT5 Sigma Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+374 added−402 removedSource: 10-K (2024-04-08) vs 10-K (2022-04-01)

Top changes in ALT5 Sigma Corp's 2023 10-K

374 paragraphs added · 402 removed · 200 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

97 edited+133 added−108 removed206 unchanged
Biggest changeThird-party payors may not consider our initial or subsequent product candidates to be medically necessary or cost-effective compared to other available therapies, or the rebate percentages required to secure favorable coverage may not yield an adequate margin over cost or may not enable us to maintain price levels sufficient to realize an appropriate return on our investment in drug development. 29 Healthcare Reform In the United States and some foreign jurisdictions, there have been, and continue to be, several legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of drug product candidates, restrict or regulate post-approval activities, and affect the profitable sale of drug product candidates.
Biggest changeThird-party payors may not consider our initial or subsequent product candidates to be medically necessary or cost-effective compared to other available therapies, or the rebate percentages required to secure favorable coverage may not yield an adequate margin over cost or may not enable us to maintain price levels sufficient to realize an appropriate return on our investment in drug development.
It is estimated that chronic pain affects 100 million individuals in the United States and over 1.5 billion people worldwide; thus, more people suffer from chronic pain than diabetes, heart disease, and cancer combined (Cowen Therapeutic Categories Outlook, March 2019).
It is estimated that chronic pain affects 100 million individuals in the United States and over 1.5 billion people worldwide; thus, more people suffer from chronic pain than diabetes, heart disease, and cancer combined (Cowen Therapeutic Categories Outlook, March 2019).
Chronic pain exacts a tremendous cost in terms of direct treatment and rehabilitation expenditures, lost worker productivity, prevalent addiction to opioid-based drugs, and emotional and financial burden for patients and their families.
Chronic pain exacts a tremendous cost in terms of direct treatment and rehabilitation expenditures, lost worker productivity, prevalent addiction to opioid-based drugs, and emotional and financial burden for patients and their families.
The bioequivalence studies for orally administered, systemically available drug products assess the rate and extent to which active pharmaceutical ingredient (the “API”) is absorbed into the bloodstream from the drug product and becomes available at the site of action.
The bioequivalence studies for orally administered, systemically available drug products assess the rate and extent to which the active pharmaceutical ingredient (the “API”) is absorbed into the bloodstream from the drug product and becomes available at the site of action.
Kevil earned his Ph.D. degree from LSU Health Shreveport in Molecular and Cellular Physiology, followed by a fellowship at the University of Alabama at Birmingham (UAB) with an emphasis on redox pathophysiology. Returning to LSU Health Shreveport in the Department of Pathology, he established cutting edge research programs regarding redox biology regulation of peripheral vascular diseases.
Kevil earned his Ph.D. from LSU Health Shreveport in Molecular and Cellular Physiology, followed by a fellowship at the University of Alabama at Birmingham (UAB) with an emphasis on redox pathophysiology. Returning to LSU Health Shreveport in the Department of Pathology, he established cutting edge research programs regarding redox biology regulation of peripheral vascular diseases.
When there is dysfunction in pain signaling, injury to the nervous system, or an unhealed injury, pain becomes no longer just a symptom, but a disease in itself. 18 Current Therapeutic Approaches to Treating Chronic Pain and Their Limitations NSAIDs Some of the most widely used therapies to treat chronic inflammatory pain are non-steroidal anti-inflammatory drugs (“NSAIDs”).
When there is dysfunction in pain signaling, injury to the nervous system, or an unhealed injury, pain becomes no longer just a symptom, but a disease in itself. Current Therapeutic Approaches to Treating Chronic Pain and Their Limitations NSAIDs Some of the most widely used therapies to treat chronic inflammatory pain are non-steroidal anti-inflammatory drugs (“NSAIDs”).
Giordano has extensive experience in commercialization and drug development, having served as Vice President or President of seven different biotechnology companies he co-founded, including companies developing platform technologies, a cancer vaccine, and Alzheimer’s Disease and cardiovascular therapies. He has managed numerous clinical trials and the launch of a medical food product. Dr.
Giordano has extensive experience in drug development, having served as Vice President or President of seven different biotechnology companies he co-founded, including companies developing platform technologies, a cancer vaccine, and Alzheimer’s Disease and cardiovascular therapies. He has managed numerous clinical trials and the launch of a medical food product. Dr.
During the development of a new drug, sponsors are given opportunities to meet with the FDA at certain points. These points may be prior to submission of an IND, at the end of Phase II, and before an NDA is submitted. Meetings at 24 other times may be requested.
During the development of a new drug, sponsors are given opportunities to meet with the FDA at certain points. These points may be prior to submission of an IND, at the end of Phase II, and before an NDA is submitted. Meetings at other times may be requested.
The United States laws that may affect our ability to operate include: • the federal Anti-Kickback Statute, which prohibits, among other things, persons from soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs; 30 • the federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other third-party payors that are false or fraudulent; • HIPAA, which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters; • HIPAA, as amended by the federal Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information; • the federal Physician Payments Sunshine Act, which among other things, requires certain manufacturers of drugs, devices, and biologics that are reimbursable by a federal healthcare program to report annually to the United States Department of Health and Human Services information related to payments and other transfers of value to physicians and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members; and • similar federal laws and state law equivalents of each of the above federal laws.
The United States laws that may affect our ability to operate include: • the federal Anti-Kickback Statute, which prohibits, among other things, persons from soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs; • the federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other third-party payors that are false or fraudulent; • HIPAA, which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters; • HIPAA, as amended by the federal Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information; • the federal Physician Payments Sunshine Act, which among other things, requires certain manufacturers of drugs, devices, and biologics that are reimbursable by a federal healthcare program to report annually to the United States Department of Health and Human Services information related to 33 Table of Contents payments and other transfers of value to physicians and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members; and • similar federal laws and state law equivalents of each of the above federal laws.
In the study by Allen, et al., these authors revealed that baseline plasma levels of nitrite were less in patients with diabetes mellitus (DM) or DM + PAD. Importantly, 4 increases in plasma nitrite levels were not observed in either DM, PAD or DM + PAD patients after supervised exercise.
In the study by Allen, et al., these authors revealed that baseline plasma levels of nitrite were less in patients with diabetes mellitus (DM) or DM + PAD. Importantly, increases in plasma nitrite levels were not observed in either DM, PAD, or DM + PAD patients after supervised exercise.
The findings that NO 2 – mediates vasodilatation, both directly and through NO generation, has led to growing interest in the potential effectiveness of nitrite as a therapeutic agent in conditions associated with DPN and endothelial 20 dysfunction.
The findings that NO 2 – mediates vasodilatation, both directly and through NO generation, has led to growing interest in the potential effectiveness of nitrite as a therapeutic agent in conditions associated with DPN and endothelial dysfunction.
In November 2019, we formed a Scientific Board of Advisors (the “SBA”) and the following doctors and scientists currently are members of our SBA: Chris Kevil, Ph.D., Chair of the Scientific Advisory Board – Dr.
In November 2019, we formed a Scientific Board of Advisors (the “SBA”) and the following doctors and scientists currently are members of our SBA: Chris Kevil, Ph.D., Chair of the Scientific Board of Advisors – Dr.
We use United States Environmental Protection Agency (the “EPA”) Responsible Appliance Disposal (“RAD”) Program-compliant methods to remove and manage hazardous components and materials properly, including CFC refrigerants, mercury, polyurethane foam insulation, and recyclable materials, such as ferrous and nonferrous metals, plastics, and glass.
We used United States Environmental Protection Agency (the “EPA”) Responsible Appliance Disposal (“RAD”) Program-compliant methods to remove and manage hazardous components and materials properly, including CFC refrigerants, mercury, polyurethane foam insulation, and recyclable materials, such as ferrous and nonferrous metals, plastics, and glass.
The process required by the FDA before a drug may be marketed in the United States generally involves the following: • completion of pre-clinical laboratory tests, animal studies, and formulation studies in compliance with the FDA’s good laboratory practice (“GLP”), regulations; • submission to the FDA of an Investigational New Drug Application (“IND”), which must become effective before human clinical trials may begin; • approval by an institutional research board (“IRB”) at each clinical site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with good clinical practice (“GCP”) requirements to establish the safety and efficacy of the proposed drug product for each indication; • submission to the FDA of a new drug application (NDA); • satisfactory completion of an FDA advisory committee review, if applicable; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practices (“cGMP”) requirements and to assure that the facilities, methods, and controls are adequate to preserve the drug’s identity, strength, quality, and purity; • satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data; • payment of user fees and securing FDA and approval of the NDA; and • compliance with any post-approval requirements, including the potential requirement to implement a risk evaluation and mitigation strategy (“REMS”), and the potential requirement to conduct post-approval studies. 23 Pre-clinical Studies Pre-clinical studies include laboratory evaluation of product chemistry, toxicity, and formulation, as well as animal studies to assess potential safety and efficacy.
The process required by the FDA before a drug may be marketed in the United States generally involves the following: • completion of pre-clinical laboratory tests, animal studies, and formulation studies in compliance with the FDA’s good laboratory practice (“GLP”), regulations; • submission to the FDA of an Investigational New Drug Application (“IND”), which must become effective before human clinical trials may begin; • approval by an institutional research board (“IRB”) at each clinical site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with good clinical practice (“GCP”) requirements to establish the safety and efficacy of the proposed drug product for each indication; • submission to the FDA of a new drug application (NDA); • satisfactory completion of an FDA advisory committee review, if applicable; 26 Table of Contents • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practices (“cGMP”) requirements and to assure that the facilities, methods, and controls are adequate to preserve the drug’s identity, strength, quality, and purity; • satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data; • payment of user fees and securing FDA and approval of the NDA; and • compliance with any post-approval requirements, including the potential requirement to implement a risk evaluation and mitigation strategy (“REMS”), and the potential requirement to conduct post-approval studies.
D and E illustrate vascular casting of the arterial vasculature in ischemic hind limbs of day 7 nitrite or PBS-treated mice, respectively. *, P Nitrite Therapy Restores Diabetic Ischemic Hind-Limb Blood Flow and Promotes Wound Heal 7 Unilateral femoral artery ligation was performed on 18-20 week old male Db/Db mice.
D and E illustrate vascular casting of the arterial vasculature in ischemic hind limbs of day 7 nitrite or PBS-treated mice, respectively. *, P 6 Table of Contents Nitrite Therapy Restores Diabetic Ischemic Hind-Limb Blood Flow and Promotes Wound Heal Unilateral femoral artery ligation was performed on 18-20 week old male Db/Db mice.
If the patient is already being treated or monitored for diabetes or other risk factors, then the physician will check for a weak or absent pulse in the extremity. Decreased blood pressure, poor wound healing, and whooshing sounds (via stethoscope) in the legs are also tell-tale signs of PAD / intermittent claudication.
If the patient is already being treated or monitored for diabetes or other risk factors, then the physician will check for a weak or absent pulse in the extremity. Decreased blood pressure, poor wound healing, and whooshing sounds (via stethoscope) in the legs are also tell-tale signs 11 Table of Contents of PAD / intermittent claudication.
Kleinbongard, et al. (2006) Free Radic Biol and Medicine 40:295-302. Plasma nitrite levels are reduced in diabetic and PAD patients Exercise is a well-known stimulator of e ndothelial nitric oxide synthase activity, an enzyme that enhances nitric oxide (NO) production, which leads to increased plasma nitrite.
Kleinbongard, et al. (2006) Free Radic Biol and Medicine 40:295-302. Plasma nitrite levels are reduced in diabetic and PAD patients Exercise is a well-known stimulator of endothelial nitric oxide synthase activity, an enzyme that enhances nitric oxide (NO) production, which leads to increased plasma nitrite.
These data reveal that baseline nitrite availability is compromised in DM patients and that supervised exercise is unable to increase plasma nitrite levels but actually results in a decrease in nitrite, highlighting a physiological efficiency of this molecule. Allen, et al., Nitric Oxide 2009 20:231-2377.
These data reveal that 3 Table of Contents baseline nitrite availability is compromised in DM patients and that supervised exercise is unable to increase plasma nitrite levels but actually results in a decrease in nitrite, highlighting a physiological efficiency of this molecule. Allen, et al., Nitric Oxide 2009 20:231-2377.
The ANDA or 505(b)(2) application also will not be approved until any applicable non-patent exclusivity listed in the Orange Book for the branded reference drug has expired. Marketing Exclusivity Market exclusivity provisions under the FDCA can delay the submission or the approval of certain marketing applications.
The ANDA or 505(b)(2) application also 31 Table of Contents will not be approved until any applicable non-patent exclusivity listed in the Orange Book for the branded reference drug has expired. Marketing Exclusivity Market exclusivity provisions under the FDCA can delay the submission or the approval of certain marketing applications.
License Agreement On November 19, 2019, we entered into a Patent and Know How License Agreement (the “License Agreement”) with UAB Research Foundation (“UABRF”), TheraVasc, and the Board of Supervisors of Louisiana State University and Agricultural and Mechanical College, acting on behalf of LSU Health Shreveport, together with UABRF and TheraVasc, the “Licensors”).
License Agreement On November 19, 2019, we entered into a Patent and Know How License Agreement (the “License Agreement”) with UAB Research Foundation (“UABRF”), TheraPAD, and the Board of Supervisors of Louisiana State University and Agricultural and Mechanical College, acting on behalf of LSU Health Shreveport, together with UABRF and TheraPAD collectively, the “Licensors”).
Our advisors and doctors have years of collective experience in leadership positions at institutions and substantial scientific experience and understand the complexity of designing and executing clinical trials for and developing therapies. • Advance the development of our initial product candidate, JAN101, designed for the treatment of patients with PAD and pain associated with the disease.
Our advisors and doctors have years of collective experience in leadership positions at institutions and substantial scientific experience and understand the complexity of designing and executing clinical trials for and developing therapies. • Advance the development of JAN101, designed for the treatment of patients with PAD and pain associated with the disease.
Other potential consequences include, among other things: • restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; • fines, warning letters or holds on post-approval clinical trials; 27 • refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product approvals; • product seizure or detention, or refusal to permit the import or export of products; or • injunctions or the imposition of civil or criminal penalties.
Other potential consequences include, among other things: • restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; • fines, warning letters or holds on post-approval clinical trials; 30 Table of Contents • refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product approvals; • product seizure or detention, or refusal to permit the import or export of products; or • injunctions or the imposition of civil or criminal penalties.
Under the new PDUFA agreement, these six- and 10-month review periods are measured from the “filing” date, rather than the receipt date for NDAs for new molecular entities, which typically adds approximately two months to the timeline for review and decision from the date of submission.
Under the new PDUFA agreement, these six- and 10-month review periods are measured from the “filing” date, rather than the receipt date for NDAs for new molecular entities, which typically adds approximately two months to the timeline for review and decision from the date of 29 Table of Contents submission.
We describe some of the associations and beneficial effects of sodium nitrite/nitrite below. 3 Plasma nitrite levels are negatively correlated to cardiovascular disease Plasma nitrite levels were inversely related to number of cardiovascular risk factors a subject had and decreased plasma nitrite was associated with decreased flow mediated vasodilation (FMD) and increased intimal medial thickness (IMT) (both are indicators of vascular pathology).
We describe some of the associations and beneficial effects of sodium nitrite/nitrite below. 2 Table of Contents Plasma nitrite levels are negatively correlated to cardiovascular disease Plasma nitrite levels were inversely related to number of cardiovascular risk factors a subject had and decreased plasma nitrite was associated with decreased flow mediated vasodilation (FMD) and increased intimal medial thickness (IMT) (both are indicators of vascular pathology).
For example, we endeavor to protect our products by, among other methods, filing United States and, potentially in the future, foreign, patent applications related to our proprietary technology, inventions, and improvements that are important to the development and implementation of our business.
For example, we endeavor to protect our products by, among other methods, filing United States and foreign patent applications related to our proprietary technology, inventions, and improvements that are important to the development and implementation of our business.
Given the association between low levels of circulating nitrite and human diseases, supplementation with sodium nitrite has been studied preclinically in animals. Below are summaries of some of the more important findings: • Promotes angiogenesis • Stimulates wound healing • Prevents tissue necrosis 5 From Arya, et al.
Given the association between low levels of circulating nitrite and human diseases, supplementation with sodium nitrite has been studied preclinically in animals. Below are summaries of some of the more important findings: • Promotes angiogenesis • Stimulates wound healing • Prevents tissue necrosis 4 Table of Contents From Arya, et al.
Bir, et al., Am J Physiol Heart Circ Physiol 2012;303:H178-H188. 10 Nitrite Therapy Prevents Tissue Necrosis in Aged Db/Db Mice Delayed sodium nitrite (165 ug/kg) or control PBS therapy was stated 5 days post-femoral artery ligation in nine-month old Db/Db mice. Nitrite therapy significantly prevented tissue necrosis (panel B) compared to control PBS therapy (panel A).
Bir, et al., Am J Physiol Heart Circ Physiol 2012;303:H178-H188. 9 Table of Contents Nitrite Therapy Prevents Tissue Necrosis in Aged Db/Db Mice Delayed sodium nitrite (165 ug/kg) or control PBS therapy was stated 5 days post-femoral artery ligation in nine-month old Db/Db mice. Nitrite therapy significantly prevented tissue necrosis (panel B) compared to control PBS therapy (panel A).
(Scale bar, 150 μm.) n = 10 mice per treatment group. Kumar D., et al., PNAS; 2008; 105:7540-7545. 6 Nitrite Therapy Augments Arterial Perfusion of Ischemic Tissue Chronic sodium nitrite therapy acutely increases ischemic tissue blood flow and stimulates arteriogenesis.
(Scale bar, 150 μm.) n = 10 mice per treatment group. Kumar D., et al., PNAS; 2008; 105:7540-7545. 5 Table of Contents Nitrite Therapy Augments Arterial Perfusion of Ischemic Tissue Chronic sodium nitrite therapy acutely increases ischemic tissue blood flow and stimulates arteriogenesis.
The Company is now working to implement suggestions by the FDA to be ready to submit a protocol amendment in late 2022.
The Company is now working to implement suggestions by the FDA to be ready to submit a protocol amendment in late 2024.
The primary efficacy endpoint was the mean difference in the change of the Neuropathic Pain Symptom Inventory (NPSI) pain score from baseline to that reported after 12 weeks of treatment.
The primary efficacy endpoint was the mean difference in the change of the Neuropathic Pain Symptom Inventory (NPSI) pain score from baseline to that 15 Table of Contents reported after 12 weeks of treatment.
In addition, these studies and a large number of other studies not reviewed above show: • Nitrite therapy is very specific, acting only in damaged, ischemic tissue; • Delayed nitrite therapy effectively restores ischemic tissue blood flow; • Nitrite therapy is effective in a wide range of pathologies involving alterations of angiogenesis including critical limb ischemia, heart failure, and tissue necrosis; • Nitrite supplementation has had positive effects in various diabetes models, including diabetic nephropathy and diabetic wound healing; • Beneficial effects center on enhancing angiogenesis, endothelial cell proliferation, and arteriogenesis; and • Sustained release nitrite therapy, unlike immediate release therapy, does not lead to vasodilation or a drop in blood pressure. 11 Our Initial Product Candidate JAN101 Our initial product candidate is designed to treat diseases associated with poor vascular function.
In addition, these studies and a large number of other studies not reviewed above show: • Nitrite therapy is very specific, acting only in damaged, ischemic tissue; • Delayed nitrite therapy effectively restores ischemic tissue blood flow; • Nitrite therapy is effective in a wide range of pathologies involving alterations of angiogenesis including critical limb ischemia, heart failure, and tissue necrosis; • Nitrite supplementation has had positive effects in various diabetes models, including diabetic nephropathy and diabetic wound healing; • Beneficial effects center on enhancing angiogenesis, endothelial cell proliferation, and arteriogenesis; and • Sustained release nitrite therapy, unlike immediate release therapy, does not lead to vasodilation or a drop in blood pressure. 10 Table of Contents JAN101 JAN 101 is designed to treat diseases associated with poor vascular function.
While we believe that our initial product candidate and our Chief Scientific Officer’s development experience and scientific knowledge provide us with competitive advantages, we face potential competition from many different sources, including pharmaceutical, biotechnology, and specialty pharmaceutical companies that market or develop therapeutics to treat chronic pain.
While we believe that JAN 101 and our Chief Scientific Officer’s development experience and scientific knowledge provide us with competitive advantages, we face potential competition from many different sources, including pharmaceutical, biotechnology, and specialty pharmaceutical companies that market or develop therapeutics to treat chronic pain.
The key competitive factors affecting the success of our initial product candidate (as well as other subsequent product candidates), if and when approved, is likely to be its efficacy, durability, safety, price, and the availability of reimbursement from government and other third-party payors. 21 Significant competition exists in the PAD pain field.
The key competitive factors affecting the success of JAN 101 (as well as other subsequent product candidates), if and when approved, is likely to be its efficacy, durability, safety, price, and the availability of reimbursement from government and other third-party payors. Significant competition exists in the PAD pain field.
Most products that are eligible for Fast Track Designation are also likely to be considered appropriate to receive a priority review. 26 In addition, products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may be eligible for accelerated approval and may be approved on the basis of adequate and well-controlled clinical trials that establish that the drug product has an effect (i) on a surrogate endpoint that is reasonably likely to predict clinical benefit or (ii) on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, including taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.
In addition, products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may be eligible for accelerated approval and may be approved on the basis of adequate and well-controlled clinical trials that establish that the drug product has an effect (i) on a surrogate endpoint that is reasonably likely to predict clinical benefit or (ii) on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, including taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.
We also use other forms of protection, such as confidential information, trade secrets, and know-how, and trademarks to protect our intellectual property, particularly where we do not believe patent protection is appropriate or obtainable. The proprietary nature of, and protection for, our initial product candidate, processes, and know-how are important to our business.
We also use other forms of protection, such as confidential information, trade secrets, and know-how, and trademarks to protect our intellectual property, particularly where we do not believe patent protection is appropriate or obtainable. 17 Table of Contents The proprietary nature of, and protection for, JAN 101, processes, and know-how are important to our business.
We have retained global rights to our initial product candidate, and, if it or one of our potential subsequent product candidates is approved by the FDA to market in the United States, we expect that our sales force will be supported by sales management, internal sales support, an outside marketing group, and distribution support.
We have retained global rights to JAN-101 and JAN123, and, if either of them or one of our potential subsequent product candidates is approved by the FDA to market in the United States, we expect that our sales force will be supported by sales management, internal sales support, an outside marketing group, and distribution support.
The lack of any truly effective treatment of PAD, along with encouraging early trial results using JAN101 on both improving vascular function and reducing pain in PAD patients, has created an opportunity potentially to treat this large unmet medical need.
The lack of any truly effective treatment of PAD, along with encouraging early trial results using JAN101 on both improving vascular function and reducing pain in PAD patients, has created an opportunity potentially to treat this large unmet medical need. By improving vascular function, JAN101 has the potential to reduce associated pain and improve PAD patients’ quality of life.
Mice were randomized to PBS or sodium nitrite (165 μg/kg) therapy twice daily via I.P. injection. Laser doppler flowmetry was performed at the indicated time points. Increased wound dehiscence was noted in the PBS treated animals at day 7 but not in nitrite treated animals. (Bir, et al., Diabetes 2014, 63(1):270-81).
Mice were randomized to PBS or sodium nitrite (165 μg/kg) therapy twice daily via I.P. injection. Laser doppler flowmetry was performed at the indicated time points. Increased wound dehiscence was noted in the PBS treated animals at day 7 but not in nitrite treated animals.
There are a number of companies developing or marketing therapies for the treatment and management of pain that may compete with our initial product candidate, including many major pharmaceutical and biotechnology companies.
There are a number of companies developing or marketing therapies for the treatment and management of pain that may compete with JAN 101, including many major pharmaceutical and biotechnology companies.
Prevalence increases as a function of patient age, rising sharply after the age of 60. Thus, in countries with an aging population, it is expected that the prevalence of PAD will only increase. There is also a strong ethnic and racial component to PAD prevalence, which may be due to cultural differences in diet and exercise, along with genetic differences.
Thus, in countries with an aging population, it is expected that the prevalence of PAD will only increase. There is also a strong ethnic and racial component to PAD prevalence, which may be due to cultural differences in diet and exercise, along with genetic differences.
(formerly known as Appliance Recycling Centers of America, Inc.) and subsidiaries (collectively, “we,” the “Company,” or “JanOne”) changed its name and broadened its business to focus on being a clinical-stage pharmaceutical company focused on finding treatments for conditions that cause severe pain and bringing drugs to market with non-addictive pain-relieving properties.
ITEM 1. BUSINESS General JanOne Inc. (formerly known as Appliance Recycling Centers of America, Inc.) and subsidiaries (collectively, “we,” the “Company,” or “JanOne”) is focused on being a clinical-stage pharmaceutical company committed to finding treatments for conditions that cause severe pain and bringing drugs to market with non-addictive pain-relieving properties.
Post-approval trials, sometimes referred to as Phase IV clinical trials, may be conducted after initial marketing approval. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication. In certain instances, the FDA may mandate the performance of Phase IV clinical trials as a condition of approval of an NDA.
Post-approval trials, sometimes referred to as Phase IV clinical trials, may be conducted after initial marketing approval. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication.
Femoral artery ligation was performed in C57BL/6J mice and the animals randomized to either PBS or sodium nitrite therapy 5 days after artery ligation. Treatments were given b.i.d. via I.P. injection. Ischemic limb blood flow was measured using laser doppler flowmetry.
Femoral artery ligation was performed in C57BL/6J mice and the animals 8 Table of Contents randomized to either PBS or sodium nitrite therapy 5 days after artery ligation. Treatments were given b.i.d. via I.P. injection. Ischemic limb blood flow was measured using laser doppler flowmetry. (Bir, et al., Diabetes 2014, 63(1):270-81).
Diabetes, chronic kidney disease, hypertension, and smoking are all risk factors that can increase the likelihood of PAD. In atherosclerosis, fat deposits (plaques) build up along arterial walls, resulting in a reduction in blood flow in the legs.
Diabetes, chronic kidney disease, hypertension, and smoking are all risk factors that can increase the likelihood of PAD. In atherosclerosis, fat deposits (plaques) build up along arterial walls, resulting in a reduction in blood flow in the legs. This same process can cause strokes if the arteries leading up to the brain are affected.
The study design was a randomized, placebo controlled, double-blind phase II study was carried out to investigate the safety and potential biological activity of multiple doses of an oral, sustained-release formulation of sodium nitrite (SR-nitrite; TheraVasc Inc., Cleveland, OH, USA), BID in doses of 40 mg and 80 mg over a 12-week treatment period, in human subjects with diabetes and neuropathic pain in the lower extremities and feet.
The study design was a randomized, placebo controlled, double-blind phase II study was carried out to investigate the safety and potential biological activity of multiple doses of an oral, sustained-release formulation of sodium nitrite (SR-nitrite; TheraVasc Inc., Cleveland, OH, USA), BID in doses of 40 mg and 80 mg over a 12-week treatment period, in human subjects with diabetes and neuropathic pain in the lower extremities and feet. 16 Table of Contents The trial was approved by the Copernicus Group Institutional Review Board and listed on ClinicalTrials.gov: www.clinicaltrials.gov/ct2/show/NCT02412852.
Angiograms, electrocardiograms, and ultrasounds can also be used to image and confirm the diagnosis. The non-drug treatment of PAD / intermittent claudication may be divided into four general categories: • Lifestyle – Primarily changes in diet and smoking cessation. • Exercise – Patients who walk, cycle, stretch, or swim can experience marked improvement.
Source: (Criqui, 2015) The non-drug treatment of PAD / intermittent claudication may be divided into four general categories: • Lifestyle – Primarily changes in diet and smoking cessation. • Exercise – Patients who walk, cycle, stretch, or swim can experience marked improvement.
The trial was approved by the Copernicus Group Institutional Review Board and listed on ClinicalTrials.gov: www.clinicaltrials.gov/ct2/show/NCT02412852. The study was funded by TheraVasc Inc. (“TheraVasc”). JAN101—Regulatory Strategy Sodium nitrite has been previously approved as one of the active components of cyanide poisoning antidote. This means the approval path for JAN101 is through a 505(b)(2) (“NDA”), which we intend to pursue.
The study was funded by TheraVasc Inc. (“TheraVasc”). JAN101—Regulatory Strategy Sodium nitrite has been previously approved as one of the active components of cyanide poisoning antidote. This means the approval path for JAN101 is through a 505(b)(2) (“NDA”), which we intend to pursue.
All of our facilities comply with licensing and permitting requirements, and employees who process appliances receive extensive safety and hazardous materials training.
During our operations of the recycling business, all of our facilities complied with licensing and permitting requirements, and employees who process appliances receive extensive safety and hazardous materials training.
The Company intends to champion new initiatives—digital technologies, educational advocacy, and revolutionary painkilling drugs that address what we believe is a multibillion dollar a year market—to help combat the opioid crisis, which claims tens of thousands of lives each year.
The Company intends to champion new initiatives—digital technologies, educational advocacy, and revolutionary painkilling drugs that address what we believe is a multibillion dollar a year market—to help combat the opioid crisis, which claims tens of thousands of lives each year. On December 28, 2022, we entered into a Purchase Agreement (the “Soin Purchase Agreement”) with Soin Therapeutics, LLC.
Only exercise itself, coupled with lifestyle changes and drug approaches, has this benefit. 13 Prescription drugs for the treatment of the underlying PAD may be divided into multiple categories, depending on the underlying condition and severity: • Cholesterol-Lowering Agents – Statins and bile acid sequestrants. • Antiplatelet Medications – Aspirin and related drugs, such as clopidogrel.
Prescription drugs for the treatment of the underlying PAD may be divided into multiple categories, depending on the underlying condition and severity: • Cholesterol-Lowering Agents – Statins and bile acid sequestrants. • Antiplatelet Medications – Aspirin and related drugs, such as clopidogrel.
Nitrite Therapy Increases Diabetic Ischemia Induced Angiogenesis Nitrite therapy prevented ischemia mediated endothelial cell density loss in normal C57BL/6J ischemic limbs. Nitrite therapy significantly restored endothelial cell density in ischemic limbs of diabetic mice to normal C57BL/6J levels compared to PBS therapy of non-ischemic and ischemic conditions.
(Bir, et al., Diabetes 2014, 63(1):270-81). 7 Table of Contents Nitrite Therapy Increases Diabetic Ischemia Induced Angiogenesis Nitrite therapy prevented ischemia mediated endothelial cell density loss in normal C57BL/6J ischemic limbs. Nitrite therapy significantly restored endothelial cell density in ischemic limbs of diabetic mice to normal C57BL/6J levels compared to PBS therapy of non-ischemic and ischemic conditions.
Before approving an NDA, the FDA will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications.
The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. 28 Table of Contents Additionally, before approving an NDA, the FDA may inspect one or more clinical trial sites to assure compliance with GCP requirements.
(“ARCA Recycling”) and Customer Connexx, LLC (“Connexx”), in our Recycling segment, as well as GeoTraq Inc. (“GeoTraq”), in our Technology segment. ARCA Recycling recycles major household appliances in North America by providing turnkey appliance recycling and replacement services for utilities and other sponsors of energy efficiency programs. Connexx is a company that provides call center services for recycling businesses.
ARCA Recycling and ARCA Canada recycle major household appliances in North America by providing turnkey appliance recycling and replacement services for utilities and other sponsors of energy efficiency programs. Connexx is a company that provides call center services for recycling businesses.
Our initial product candidate, JAN101 (formerly known as TV1001SR), is a potential treatment for PAD, a vascular disease that affects more than 8.5 million people in the U.S. and more than 60 million people worldwide. We expect to commence Phase IIb clinical trials for the treatment of PAD in 2022.
JAN101 (formerly known as TV1001SR) is a potential treatment for PAD, a vascular disease that affects more than 8.5 million people in the U.S. and more than 60 million people worldwide.
Opioids Opioids are some of the most widely prescribed therapeutics for chronic and acute pain, and sales of these drugs have quadrupled between 1999 and 2010.According to a National Survey on Drug Use and Health report, in 2016 more than one-third of adult Americans were prescribed opioids and 230 million opioid prescriptions were written that year in the United States.
According to a National Survey on Drug Use and Health report, in 2016 more than one-third of adult Americans were prescribed opioids and 230 million opioid prescriptions were written that year in the United States.
Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality, and/or expanding access. In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives.
Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality, and/or expanding access.
JAN101 Generally JAN101, formerly known as TV1001SR, our initial product candidate, is a patented oral, sustained release pharmaceutical composition of sodium nitrite that targets poor blood flow to the extremities, such as those with vascular complications of diabetes or PAD and treats pain.
We expect to commence Phase IIb/III clinical trials for the treatment of PAD in 2025. 1 Table of Contents JAN101 Generally JAN101, formerly known as TV1001SR, is a patented oral, sustained-release pharmaceutical composition of sodium nitrite that targets poor blood flow to the extremities, such as those with vascular complications of diabetes or PAD and treats pain.
He has served as president of the Society for Vascular Medicine, as a director of the American Board of Vascular Medicine, and as an associate editor of Vascular Medicine. Joshua Beckman, MD – Dr. Beckman founded and is director of the Section of Vascular Medicine in the Division of Cardiovascular and is Professor of Medicine at Vanderbilt University Medical Center.
He has served as president of the Society for Vascular Medicine, as a director of the American Board of Vascular Medicine, and as an associate editor of Vascular Medicine. Joshua Beckman, MD – Dr. Beckman is the Director of Vascular Medicine and the Gayle and Paul Stoffel Distinguished Chair in Cardiology at UT Southwestern Medical Center.
The applicant may also elect to submit a “section viii” statement certifying that its proposed label does not contain (or carves out) any language regarding the patented method-of-use rather than certify to a listed method-of-use patent. 28 If the referenced NDA holder and patent owners assert a patent challenge directed to one of the Orange Book-listed patents within 45 days of the receipt of the paragraph IV certification notice, the FDA is prohibited from approving the application until the earlier of 30 months from the receipt of the paragraph IV certification expiration of the patent, settlement of the lawsuit, or a decision in the infringement case that is favorable to the applicant.
If the referenced NDA holder and patent owners assert a patent challenge directed to one of the Orange Book-listed patents within 45 days of the receipt of the paragraph IV certification notice, the FDA is prohibited from approving the application until the earlier of 30 months from the receipt of the paragraph IV certification expiration of the patent, settlement of the lawsuit, or a decision in the infringement case that is favorable to the applicant.
An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to one or more proposed clinical trials and places the clinical trial on a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.
Some pre-clinical testing may continue even after the IND is submitted. An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to one or more proposed clinical trials and places the clinical trial on a clinical hold.
Pentoxifylline, for example, is indicated “…for the treatment of patients with intermittent claudication on the basis of chronic occlusive arterial disease of the limbs.” (Sanofi-Aventis U.S. LLC, 2010). However, the evidence supporting the effectiveness of pentoxifylline is mixed. Short-term courses of NSAIDs, such as ibuprofen, may be used, provided the patient is not on another anticoagulant, like aspirin.
Pentoxifylline, for example, is indicated “…for the treatment of patients with intermittent claudication on the basis of chronic occlusive arterial disease of the limbs.” (Sanofi-Aventis U.S. LLC, 2010). However, the evidence supporting the effectiveness of pentoxifylline is mixed.
We strive to maximize our initial product candidate’s potential based on its unique mechanism of action related to the origin of the pain signal. 19 A Randomized, Double-Blind Study of the Effects of a Sustained Release Formulation of Sodium Nitrite (SR-nitrite) on Patients with Diabetic Neuropathy Background: Sodium nitrite has been reported to be effective in reducing chronic peripheral pain pain.
A Randomized, Double-Blind Study of the Effects of a Sustained Release Formulation of Sodium Nitrite (SR-nitrite) on Patients with Diabetic Neuropathy Background: Sodium nitrite has been reported to be effective in reducing chronic peripheral pain.
The FDA or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk.
In certain instances, the FDA may mandate the performance of Phase IV clinical trials as a condition of approval of an NDA. 27 Table of Contents The FDA or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk.
Non-drug pain relievers, such as TENS and massage therapy, may also be used in these patients. Opioids may also be used, which creates a risk for addiction and potential misuse at the medicine cabinet by family members.
Opioids may also be used, which creates a risk for addiction and potential misuse at the medicine cabinet by family members.
These data suggest that nitrite therapy may be useful in attenuating microvascular rarefaction due to loss of nitric oxide that is observed during metabolic dysfunction (Frisbee JC AJP Integr Comp Physiol 2005 289(2):R307-16; Stepp et al Microcirculation 2007 14(4-5): 311-6). 8 Delayed Nitrite Therapy Restores Ischemic Hind-Limb Blood Flow Studies were performed to determine whether nitrite mediated therapy would be effective in tissue that had been left ischemic for 5 days after femoral artery ligation.
These data suggest that nitrite therapy may be useful in attenuating microvascular rarefaction due to loss of nitric oxide that is observed during metabolic dysfunction (Frisbee JC AJP Integr Comp Physiol 2005 289(2):R307-16; Stepp et al Microcirculation 2007 14(4-5): 311-6).
Giordano has a Ph.D. focused in Molecular Genetics from The Ohio State University and completed Fellowships at the NIH NCI-Designated Cancer Centers and the NIH National Institute of Aging. Dr. Amol Soin , our Chief Medical Officer, joined the Company in January 2020. Dr.
Giordano has a Ph.D. focused in Molecular Genetics from The Ohio State University and completed Fellowships at the NIH National Cancer Institute and the NIH National Institute of Aging.
The sponsor must purchase a clinical trial insurance policy and, in most EU countries, the sponsor is liable to provide “no fault” compensation to any study subject injured in the clinical trial. Prior to commencing a clinical trial, the sponsor must obtain a clinical trial authorization from the competent authority, and a positive opinion from an IEC.
The sponsor must purchase a clinical trial insurance 34 Table of Contents policy and, in most EU countries, the sponsor is liable to provide “no fault” compensation to any study subject injured in the clinical trial.
There are limited therapeutic options available for patients with PAD and we believe that JAN101 has the potential to transform the standard of care to a twice-a-day pill to improve moderate to severe PAD substantially.
There are limited therapeutic options available for patients with PAD and we believe that JAN101 has the potential to transform the standard of care to a twice-a-day pill to improve moderate-to-severe PAD substantially. • Leverage clinical activity of JAN101 possibly to expand into new indications. The Company is in discussion with multiple researchers about expanding JAN101’s use into other indications.
We currently intend to retain all commercial rights to JAN101 in the United States and selectively partner outside of the United States. Because we believe that PAD is an attractive market for many major pharmaceutical companies, we may sub-license or partner certain indications if we believe it may enhance stockholder value.
Because we believe that PAD is an attractive market for many major pharmaceutical companies, we may sub-license or partner certain indications if we believe it may enhance stockholder value.
We will also evaluate licensing and partnering with third parties to help us reach other sales channels and geographic markets inside and outside of the United States. 22 Government Regulation The FDA and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial and burdensome requirements upon companies involved in the clinical development, manufacture, marketing, and distribution of drugs, such as those we are developing.
Government Regulation The FDA and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial and burdensome requirements upon companies involved in the clinical development, manufacture, marketing, and distribution of drugs, such as those we are developing.
His work has helped to determine the mechanisms responsible for how stress contributes to relapse to drug use. He has published over 100 manuscripts, has written 15 book chapters, and was issued five patents, one of which is a drug currently in clinical development. Dr. Goeders also serves as the Executive Director of the Louisiana Addiction Research Center.
He has published over 100 manuscripts, has written 15 book chapters, and was issued five patents, one of which is a drug currently in clinical development. Dr. Goeders also serves as the Executive Director of the Louisiana Addiction Research Center. Commercial Operations We currently do not have any marketing and sales organization.
We believe that the most effective way to treat chronic pain is through therapies that specifically target the origin of the pain signal.
We believe that the most effective way to treat chronic pain is through therapies that specifically target the origin of the pain signal. We strive to maximize JAN 101’s potential based on its unique mechanism of action related to the origin of the pain signal.
(Bir, et al., Diabetes 2014, 63(1):270-81). 9 Delayed nitrite therapy increases SPY angiogram arteriogenesis Delayed nitrite therapy increases SPY angiogram arteriogenesis. Representative temporal SPY angiogram image stills (3–6s) are shown at 11 days following ligation and 6 days after beginning therapy (either PBS or sodium nitrite). Left : PBS control angiogram.
Delayed nitrite therapy increases SPY angiogram arteriogenesis Delayed nitrite therapy increases SPY angiogram arteriogenesis. Representative temporal SPY angiogram image stills (3–6s) are shown at 11 days following ligation and 6 days after beginning therapy (either PBS or sodium nitrite). Left : PBS control angiogram. Right : sodium nitrite angiogram following injection of ICG. n = 5 animals per cohort.
Right : sodium nitrite angiogram following injection of ICG. n = 5 animals per cohort. Circles identify limb anatomical regions of vascular blush, whereas arrows indicate perfused vessels that progressively occur over time.
Circles identify limb anatomical regions of vascular blush, whereas arrows indicate perfused vessels that progressively occur over time.
If the product has not received a National MA in any Member State at the time of application, it can be approved simultaneously in various Member States through the Decentralized Procedure. 31 Under the above described procedures, before granting the MA, the EMA or the competent authorities of the Member States of the EEA make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.
Under the above-described procedures, before granting the MA, the EMA or the competent authorities of the Member States of the EEA make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.
Surgical approaches will not, in the long run, improve exercise capacity and walking distance.
Surgical approaches will not, in the long run, improve exercise capacity and walking distance. Only exercise itself, coupled with lifestyle changes and drug approaches, has this benefit.
GeoTraq has been engaged in the development and design of cellular transceiver modules and associated wireless services. The information contained in or accessible from our website is not incorporated into this Annual Report on Form 10-K (the “Form 10-K”), and it should not be considered part of this Form 10-K.
The information contained in or accessible from our website is not incorporated into this Annual Report on Form 10-K (the “Form 10-K”), and it should not be considered part of this Form 10-K. We have included our website address in this Form 10-K solely as an inactive textual reference.
An IND sponsor must submit the results of the pre-clinical tests, together with manufacturing information, analytical data, and any available clinical data or literature, among other things, to the FDA as part of an IND. Some pre-clinical testing may continue even after the IND is submitted.
Pre-clinical Studies Pre-clinical studies include laboratory evaluation of product chemistry, toxicity, and formulation, as well as animal studies to assess potential safety and efficacy. An IND sponsor must submit the results of the pre-clinical tests, together with manufacturing information, analytical data, and any available clinical data or literature, among other things, to the FDA as part of an IND.
As a result, submission of an IND may not result in the FDA allowing clinical trials to commence.
In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. As a result, submission of an IND may not result in the FDA allowing clinical trials to commence.
Since that time, we have provided our services to approximately 400 utilities and other providers of energy efficiency programs throughout North America. 32 We currently have contracts to recycle, or to replace and recycle, major household appliances for approximately 100 utilities and other providers of energy efficiency services across North America.
Through March 8, 2023, when we disposed of our recycling business, we had contracts to recycle, or to replace and recycle, major household appliances for approximately 100 utilities and other providers of energy efficiency services across North America.

… 258 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

74 edited+19 added−52 removed92 unchanged
Biggest changeIf a similar dose, formulation and route of administration is developed for another indication by a different company, we cannot guarantee that the product they market for the other indication will not be prescribed off-label by doctors or filled by pharmacists for use in indications our patents cover and that if less expensive, would not negatively affect our sales, if our product is ultimately approved by the FDA The degree of future protection afforded by the patent rights licensed to us is uncertain, because legal means afford only limited protection and may not adequately protect our rights, permit us to gain or keep our competitive advantage, or provide us with any competitive advantage at all.
Biggest changeIf a similar dose, formulation, and route of administration is developed for another indication by a different company, we cannot guarantee that the product they market for the other indication will not be prescribed off-label by doctors or filled by pharmacists for use in indications our patents cover and that if less expensive, would not negatively affect our sales, if JAN101 or JAN123 is ultimately approved by the FDA.
While the FDA allowed the trial to continue, there is no guarantee that if the product manufactured by CoreRx is similarly unstable, the FDA will allow us to continue to develop the product. Even if the product manufactured by CoreRx is stable, the FDA may require additional studies to confirm the stability of the product, increasing development cost and times.
While the FDA allowed the trial to continue, there is no guarantee that, if the product manufactured by CoreRx is similarly unstable, the FDA will allow us to continue to develop that product. Even if the product manufactured by CoreRx is stable, the FDA may require additional studies to confirm the stability of the product, increasing development cost and times.
The commencement and completion of clinical studies can be delayed for a number of reasons, including delays related to: (i) the FDA or a comparable foreign regulatory authority failing to grant permission to proceed and placing the clinical study on hold; (ii) subjects for clinical testing failing to enroll or remain enrolled in our trials at the rate we expect; (iii) a facility manufacturing our initial or subsequent product candidates being ordered by the FDA or other government or regulatory authorities to shut down, temporarily or permanently, due to violations of cGMP requirements or other applicable requirements, or cross-contaminations of the product candidates in the manufacturing process; (iv) any changes to our manufacturing process that may be necessary or desired; (v) subjects choosing an alternative treatment for the indications for which we are developing our initial or subsequent product candidates, or participating in competing clinical studies; (vi) subjects experiencing severe or unexpected drug-related adverse effects; (vii) reports from clinical testing on similar technologies and products raising safety and/or efficacy concerns; (viii) third-party clinical investigators losing their licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule, or employing methods consistent with the clinical trial protocol, cGMP requirements, or other third parties not performing data collection and analysis in a timely or accurate manner; (ix) inspections of clinical study sites by the FDA, comparable foreign regulatory authorities, or IRBs finding regulatory violations that require us to undertake corrective action, result in suspension or termination of one or more sites or the imposition of a clinical hold on the entire study, or that prohibit us from using some or all of the data in support of our marketing applications; (x) third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or any of the data produced by such contractors in support of our marketing applications; (xi) one or more IRBs refusing to approve, suspending, or terminating the study at an investigational site, precluding enrollment of additional subjects, or withdrawing its 46 approval of the trial; (xii) reaching agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; (xiii) deviations of the clinical sites from trial protocols or dropping out of a trial; (xiv) adding new clinical trial sites; (xv) the inability of the CRO to execute any clinical trials for any reason; and (xvi) government or regulatory delays or “clinical holds” requiring suspension or termination of a trial.
The commencement and completion of clinical studies can be delayed for a number of reasons, including delays related to: (i) the FDA or a comparable foreign regulatory authority failing to grant permission to proceed and placing the clinical study on hold; (ii) subjects for clinical testing failing to enroll or remain enrolled in our trials at the rate we expect; (iii) a facility manufacturing our initial or subsequent product candidates being ordered by the FDA or other government or regulatory authorities to shut down, temporarily or permanently, due to violations of cGMP requirements or other applicable requirements, or cross-contaminations of the product candidates in the manufacturing process; (iv) any changes to our manufacturing process that may be necessary or desired; (v) subjects choosing an alternative treatment for the indications for which we are developing our initial or subsequent product candidates, or participating in competing clinical studies; (vi) subjects experiencing severe or unexpected drug-related adverse effects; (vii) reports from clinical testing on similar technologies and products raising safety and/or efficacy concerns; (viii) third-party clinical investigators losing their licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule, or employing methods consistent with the clinical trial protocol, cGMP requirements, or other third parties not performing data collection and analysis in a timely or accurate manner; (ix) inspections of clinical study sites by the FDA, comparable foreign regulatory authorities, or IRBs finding regulatory violations that require us to undertake corrective action, result in suspension or termination of one or more sites or the imposition of a clinical hold on the entire study, or that prohibit us from using some or all of the data in support of our marketing applications; (x) third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or any of the data produced by such contractors in support of our marketing applications; (xi) one or more IRBs refusing to approve, suspending, or terminating the study at an investigational site, precluding enrollment of additional subjects, or withdrawing its approval of the trial; (xii) reaching agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; (xiii) deviations of the clinical sites from trial protocols or dropping out of a trial; (xiv) adding new clinical trial sites; (xv) the inability of the CRO to execute any clinical trials for any reason; and (xvi) government or regulatory delays or “clinical holds” requiring suspension or termination of a trial.
If we or a regulatory agency discover previously unknown problems with one of our product candidates, such as adverse events of unanticipated severity or frequency, problems with the facility where the product is manufactured, or we or our manufacturers fail to comply with applicable regulatory requirements, we may be subject to the following administrative or judicial sanctions: (i) restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary or mandatory product recalls; (ii) issuance of warning letters or untitled letters; (iii) clinical holds; (iv) injunctions or the imposition of civil or criminal penalties or monetary fines; (v) suspension or withdrawal of regulatory approval; (vi) suspension of any ongoing clinical trials; (vii) refusal to approve pending applications or supplements to approved applications filed by us, or suspension or revocation of product license approvals; (viii) suspension or imposition of restrictions on operations, including costly new manufacturing 45 requirements; or (ix) product seizure or detention or refusal to permit the import or export of product.
If we or a regulatory agency discover previously unknown problems with one of our product candidates, such as adverse events of unanticipated severity or frequency, problems with the facility where the product is manufactured, or we or our manufacturers fail to comply with applicable regulatory requirements, we may be subject to the following administrative or judicial sanctions: (i) restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary or mandatory product recalls; (ii) issuance of warning letters or untitled letters; (iii) clinical holds; (iv) injunctions or the imposition of civil or criminal penalties or monetary fines; (v) suspension or withdrawal of regulatory approval; (vi) suspension of any ongoing clinical trials; (vii) refusal to approve pending applications or supplements to approved applications filed by us, or suspension or revocation of product license approvals; (viii) suspension or imposition of restrictions on operations, including costly new manufacturing requirements; or (ix) product seizure or detention or refusal to permit the import or export of product.
In November 2019, UABRF, TheraVasc, and the Board of Supervisors of Louisiana State University and Agricultural and Mechanical College, acting on behalf of LSU Health Shreveport, together with UABRF and TheraVasc, the “Licensors”), granted us an exclusive worldwide, royalty-bearing license to the patent rights for SR TV1001 (now known as JAN101) in the negotiated fields of use.
In November 2019, UABRF, TheraVasc, and the Board of Supervisors of Louisiana State University and Agricultural and Mechanical College, acting on behalf of LSU Health Shreveport, together with UABRF and TheraVasc, (collectively, the “Licensors”), granted us an exclusive worldwide, royalty-bearing license to the patent rights for SR TV1001 (now known as JAN101) in the negotiated fields of use.
Any of the foregoing scenarios could materially harm the commercial success of our product candidate. 44 Even if we obtain marketing approval for our product candidate, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense.
Any of the foregoing scenarios could materially harm the commercial success of our product candidate. Even if we obtain marketing approval for our product candidate, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense.
Were we to encounter manufacturing difficulties, our ability to produce a sufficient supply of any of our product candidates might be negatively affected. Our inability to coordinate the efforts of our 41 third-party manufacturing partners, or the lack of capacity available at our third-party manufacturing partners, could impair our ability to supply any of our product candidates at required levels.
Were we to encounter manufacturing difficulties, our ability to produce a sufficient supply of any of our product candidates might be negatively affected. Our inability to coordinate the efforts of our third-party manufacturing partners, or the lack of capacity available at our third-party manufacturing partners, could impair our ability to supply any of our product candidates at required levels.
We cannot be certain that any patent application owned by a third 47 party will not have priority over patent applications in which we hold license rights or that we will not be involved in interference, opposition or invalidity proceedings before United States or foreign patent offices.
We cannot be certain that any patent application owned by a third party will not have priority over patent applications in which we hold license rights or that we will not be involved in interference, opposition or invalidity proceedings before United States or foreign patent offices.
In addition, the increase in quantities required for commercialization of the product, if commercialize occurs, could require modifying the manufacturing process to produce larger quantities of tablets more efficiently. Such modifications of the manufacturing process, if even possible, could result in significant delays in the delivery of the product.
In addition, the increase in quantities required for commercialization of the product, if commercialization occurs, could require modifying the manufacturing process to produce larger quantities of tablets more efficiently. Such modifications of the manufacturing process, if even possible, could result in significant delays in the delivery of the product.
We will be validating the manufacturing process, with appropriate process parameters and critical process, at CoreRx in 2022. Based on current batch sizes, these validated processes will support the manufacture of approximately 6.5 million tablets a month. This would allow us to enter the marketplace, but would support sales of only 1-2% of the addressable market.
We will be validating the manufacturing process, with appropriate process parameters and critical process, at CoreRx in 2024. Based on current batch sizes, these validated processes will support the manufacture of approximately 6.5 million tablets a month. This would allow us to enter the marketplace, but would support sales of only 1-2% of the addressable market.
In particular, potential investors should consider that we may be unable to (i) successfully implement or execute the business plan of our biotechnology business or currently validate that our biotechnology business plan is sound; (ii) successfully complete clinical trials and obtain regulatory approval for the marketing of our initial product candidate; (iii) successfully demonstrate a favorable differentiation between our initial product candidate and the current products on the market; (iv) successfully manufacture our clinical drug product and establish a commercial drug supply; (v) secure market exclusivity and/or adequate intellectual property protection for our initial product candidate; and (vi) raise sufficient funds in the capital markets to effectuate our biotechnology business plan, including product and clinical development, regulatory approval, and commercialization for our initial product candidate.
In particular, potential investors should consider that we may be unable to (i) successfully implement or execute the business plan of our biotechnology business or currently validate that our biotechnology business plan is sound; (ii) successfully complete clinical trials and obtain regulatory approval for the marketing of JAN101 or JAN123; (iii) successfully demonstrate a favorable differentiation between JAN101 or JAN123 and the current products on the market; (iv) successfully manufacture our clinical drug product and establish a commercial drug supply; (v) secure market exclusivity and/or adequate intellectual property protection for JAN101 or JAN123; and (vi) raise sufficient funds in the capital markets to effectuate our biotechnology business plan, including product and clinical development, regulatory approval, and commercialization for JAN101 or JAN123.
Our success depends on our receipt of the regulatory approvals described above, and the issuance of such regulatory approvals is uncertain and subject to a number of risks, including the following: (i) the results of toxicology studies may not support the filing of an NDA for our initial product candidate; (ii) the FDA may require additional pharmacokinetic studies with JAN101, including studies with food, prior to allowing the Company to conduct Phase IIb and Phase III clinical trials; (iii) the FDA or comparable foreign regulatory authorities or Institutional Review Boards (“IRBs”) may disagree with the design or implementation of our clinical trials; (iv) we may not be able to provide acceptable evidence of our initial product candidate’s safety and efficacy; (v) the results of our clinical trials may not be satisfactory or may not meet the level of statistical or clinical significance required by the FDA, the EMA, or other regulatory agencies for us to receive marketing approval for our initial product candidate; (vi) the dosing of our initial product candidate in a particular clinical trial may not be at an optimal level; (vii) patients in our clinical trials may suffer adverse effects for reasons that may or may not be related to our initial product candidate; (viii) the data collected from clinical trials may not be sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the United States or elsewhere; (ix) the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and (x) the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval of our initial product candidate.
Our success depends on our receipt of the regulatory approvals described above, and the issuance of such regulatory approvals is uncertain and subject to a number of risks, including the following: (i) the results of toxicology studies may not support the filing of an NDA for JAN101; (ii) the FDA may require additional pharmacokinetic studies with JAN101, including studies with food, prior to allowing the Company to conduct Phase IIb and Phase III clinical trials; (iii) the FDA or comparable foreign regulatory authorities or Institutional Review Boards (“IRBs”) may disagree with the design or implementation of our clinical trials; (iv) we may not be able to provide acceptable evidence of JAN101’s safety and efficacy; (v) the results of our clinical trials may not be satisfactory or may not meet the level of statistical or clinical significance required by the FDA, the EMA, or other regulatory agencies for us to receive marketing approval for JAN101; (vi) the dosing of JAN101 in a particular clinical trial may not be at an optimal level; (vii) patients in our clinical trials may 41 Table of Contents suffer adverse effects for reasons that may or may not be related to JAN101; (viii) the data collected from clinical trials may not be sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the United States or elsewhere; (ix) the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and (x) the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval of JAN101.
Our business model is entirely dependent on certain patent rights licensed to us from the Licensors (as defined below), and the loss of those license rights would, in all likelihood, cause our business, as presently contemplated, to fail.
Our business model is partially dependent on certain patent rights licensed to us from the Licensors (as defined below), and the loss of those license rights would, in all likelihood, cause our business, as presently contemplated, to fail.
We will rely on our method of use and oral formulation patents to protect our product, which may also put our product at risk from companies developing oral formulations using the same API for other indications.
We will rely on our method of use and oral formulation patents to protect our products, which may also put our products at risk from companies developing oral formulations using the same API for other indications.
Regardless of the merits or eventual outcome, liability claims may result in, among other things (i) decreased demand for our initial product candidate or any future products that we may develop; (ii) failure to obtain regulatory approval for our product candidates; (iii) withdrawal of participants in our clinical trials; (iv) substantial monetary awards to trial participants or patients; (v) product recalls 42 or withdrawals or labeling, marketing, or promotional restrictions; and (vi) the inability to commercialize our initial or subsequent product candidates.
Regardless of the merits or eventual outcome, liability claims may result in, among other things (i) decreased demand for JAN101, JAN123 or any future products that we may develop; (ii) failure to obtain regulatory approval for our product candidates; (iii) withdrawal of participants in our clinical trials; (iv) substantial monetary awards to trial participants or patients; (v) product recalls or withdrawals or labeling, marketing, or promotional restrictions; and (vi) the inability to commercialize our initial or subsequent product candidates.
The degree of market acceptance for our initial product candidate will depend on a number of factors, including (i) demonstration of clinical safety and efficacy; (ii) relative convenience, dosing burden, and ease of administration; (iii) the prevalence and severity of any adverse effects; (iv) the willingness of physicians to prescribe our initial product candidate and the target patient population to try new therapies; (v) efficacy of our initial product candidate compared to competing products; (vi) the introduction of any new products that may in the future become available, targeting indications for which our initial product candidate may be approved; (vii) new procedures or therapies that may reduce the incidences of any of the indications in which our initial product candidate may show utility; (viii) pricing and cost-effectiveness; (ix) the inclusion or omission of our initial product candidate in applicable guidelines; (x) the effectiveness of our own or any future collaborators’ sales and marketing strategies; (xi) limitations or warnings contained in approved labeling from regulatory authorities; (xii) our ability to obtain and maintain sufficient third-party coverage or reimbursement from government health care programs, including Medicare and Medicaid, private health insurers, and other third-party payors or to receive the necessary pricing approvals from government bodies regulating the pricing and usage of therapeutics; and (xiii) the willingness of patients to pay out-of-pocket in the absence of third-party coverage or reimbursement or government pricing approvals.
The degree of market acceptance for JAN101 will depend on a number of factors, including (i) demonstration of clinical safety and efficacy; (ii) relative convenience, dosing burden, and ease of administration; (iii) the prevalence and severity of any adverse effects; (iv) the willingness of physicians to prescribe JAN101 and the target patient population to try new therapies; (v) efficacy of JAN 101 compared to competing products; (vi) the introduction of any new products that may in the future become available, targeting indications for which JAN101 may be approved; (vii) new procedures or therapies that may reduce the incidences of any of the indications in which JAN101 may show utility; (viii) pricing and cost-effectiveness; (ix) the inclusion or omission of JAN101 in applicable guidelines; (x) the effectiveness of our own or any future collaborators’ sales and marketing strategies; (xi) limitations or warnings contained in approved labeling from regulatory authorities; (xii) our ability to obtain and maintain sufficient third-party coverage or reimbursement from government health care programs, including Medicare 42 Table of Contents and Medicaid, private health insurers, and other third-party payors or to receive the necessary pricing approvals from government bodies regulating the pricing and usage of therapeutics; and (xiii) the willingness of patients to pay out-of-pocket in the absence of third-party coverage or reimbursement or government pricing approvals.
ITEM 1A. RI SK FACTORS You should carefully consider the risks described below with respect to an investment in our shares. If any of the following risks actually occur, our business, financial condition, operating results or cash provided by operations could be materially harmed.
ITEM 1A. RISK FACTORS You should carefully consider the risks described below with respect to an investment in our shares. If any of the following risks actually occur, our business, financial condition, operating results or cash provided by operations could be materially harmed.
If a similar dose, formulation, and route of administration is developed for another indication by a different company, we cannot guarantee that the product they market for the other indication will not be prescribed off-label by doctors or filled by pharmacists for use in indications our patents cover and that if less expensive, would not negatively affect our sales, if our initial product candidate is ultimately approved by the FDA.
If a similar dose, formulation, and route of administration is developed for another indication by a different company, we cannot guarantee that the product they market for the other indication will not be prescribed off-label by doctors or filled by pharmacists for use in indications our patents cover and that if less expensive, would not negatively affect our sales, if our products are ultimately approved by the FDA.
Failure by our contract manufacturer to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, failure to grant approval to market our initial product candidate, delays, suspensions or withdrawals of approvals, inability to supply product, operating restrictions, and criminal prosecutions, any of which could significantly and adversely affect our biotechnology business.
Failure by our contract manufacturer to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, failure to grant approval to market JAN101 or JAN123, delays, suspensions or withdrawals of approvals, inability to supply product, operating restrictions, and criminal prosecutions, any of which could significantly and adversely affect our biotechnology business.
Accordingly, an adverse determination in a judicial or administrative proceeding, or the failure to obtain necessary licenses, could prevent us from developing and commercializing our initial product candidate or a subsequent product candidate, which could harm our business, financial condition, and results of operations.
Accordingly, an adverse determination in a judicial or administrative proceeding, or the failure to obtain necessary licenses, could prevent us from developing and commercializing JAN101, JAN123 or a subsequent product candidate, which could harm our business, financial condition, and results of operations.
The market price of our common stock has been, and may continue to be volatile and fluctuate significantly, which could result in substantial losses for investors and subject us to securities class action litigation. The trading price for our common stock has been, and we expect it to continue to be, volatile .
GENERAL RISK FACTORS The market price of our common stock has been, and may continue to be volatile and fluctuate significantly, which could result in substantial losses for investors and subject us to securities class action litigation. The trading price for our common stock has been, and we expect it to continue to be, volatile.
Even though our patents provide protection for specific uses, we will not be able to prevent other companies from developing the same API for other uses.
Even though our patents provide protection for specific uses, we will not be able to prevent other companies from developing the same APIs for other uses.
We will not control the manufacturing process of our initial or subsequent product candidates and will be completely dependent on our contract manufacturing partners for compliance with cGMPs, for manufacture of both active drug substances and finished drug products.
We will not control the manufacturing process of JAN101, JAN123 or subsequent product candidates and will be completely dependent on our contract manufacturing partners for compliance with cGMPs, for manufacture of both active drug substances and finished drug products.
CoreRx identified an API from Merck KGaA for use in the current production of clinical grade JAN101. At the time of the manufacture of the API, the product met the specifications outlined in both the drug substance monographs for Europe and the US.
CoreRx identified an API from Merck KGaA for use in the current production of clinical grade JAN101. At the time of the manufacture of the API, the product met the specifications outlined in both the drug 39 Table of Contents substance monographs for Europe and the US.
In the United States, the distribution of product samples to physicians must comply with the requirements of the United States Prescription Drug Marketing Act. Application holders must obtain FDA approval for product and manufacturing changes, depending on the nature of the change.
In the United States, the distribution of product samples to physicians must comply with the requirements of the United States Prescription Drug Marketing Act. Application holders must obtain FDA approval for 43 Table of Contents product and manufacturing changes, depending on the nature of the change.
In addition, increased scrutiny by Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.
In addition, increased scrutiny by Congress of the FDA’s approval process may 44 Table of Contents significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.
All of these activities are also potentially subject to United States federal and state consumer protection and unfair competition laws. Similar requirements exist in many of these areas in other countries. In addition, if our initial product candidate is approved for a particular indication, our product labeling, advertising, and promotion would be subject to regulatory requirements and continuing regulatory review.
All of these activities are also potentially subject to United States federal and state consumer protection and unfair competition laws. Similar requirements exist in many of these areas in other countries. In addition, if JAN101 or JAN123 is approved for a particular indication, our product labeling, advertising, and promotion would be subject to regulatory requirements and continuing regulatory review.
Any patent-related legal action against us claiming damages and seeking to enjoin commercial activities relating to any of our product candidates or our processes could subject us to potential liability for damages and require us to obtain a license to continue to manufacture or market our initial product candidate or any subsequent product candidates.
Any patent-related legal action against us claiming damages and seeking to enjoin commercial activities relating to any of our product candidates or our processes could subject us to potential liability for damages and require us to obtain a license to continue to manufacture or market JAN101, JAN123 or any subsequent product candidates.
In addition, we will not have control over the ability of our contract manufacturer to maintain adequate quality control, quality assurance, and qualified personnel. Failure by our contract manufacturer to comply with or maintain any of these standards could adversely affect our ability to develop, manufacture, obtain regulatory approval for or market our initial product candidate, if approved.
In addition, we will not have control over the ability of our contract manufacturer to maintain adequate quality control, quality assurance, and qualified personnel. Failure by our contract manufacturer to comply with or maintain any of these standards could adversely affect our ability to develop, manufacture, obtain regulatory approval for or market JAN101 or JAN123, if approved.
Failure to obtain regulatory approval for our initial product candidate for the foregoing, or any other reasons, will prevent us from commercializing our initial product candidate, and our ability to generate revenue will be materially impaired. Clinical testing is expensive, is difficult to design and implement, can take many years to complete and is uncertain as to outcome .
Failure to obtain regulatory approval for JAN101 or JAN123 for the foregoing, or any other reasons, will prevent us from commercializing JAN101 or JAN123, and our ability to generate revenue will be materially impaired. Clinical testing is expensive, is difficult to design and implement, can take many years to complete, and is uncertain as to outcome .
If we receive marketing approval for our initial product candidate, physicians may nevertheless legally prescribe our product to their patients in a manner that is inconsistent with the approved label. If we are found to have promoted such off-label uses, we may become subject to significant liability and government fines.
If we receive marketing approval for JAN101 or JAN123, physicians may nevertheless legally prescribe our product to their patients in a manner that is inconsistent with the approved label. If we are found to have promoted such off-label uses, we may become subject to significant liability and government fines.
Countries in which our initial product candidate is sold through reimbursement schemes under national health insurance programs frequently require that manufacturers and sellers of pharmaceutical products obtain governmental approval of initial prices and any subsequent price increases. In certain countries, including the United States, government-funded and private medical care plans can exert significant indirect pressure on prices.
Countries in which JAN101 or JAN123 is sold through reimbursement schemes under national health insurance programs frequently require that manufacturers and sellers of pharmaceutical products obtain governmental approval of initial prices and any subsequent price increases. In certain countries, including the United States, government-funded and private medical care plans can exert significant indirect pressure on prices.
Our initial product candidate may infringe the intellectual property rights of others, which could increase our costs and delay or prevent our development and commercialization efforts. Our success depends in part on avoiding infringement of the proprietary technologies of others. The pharmaceutical industry has been characterized by frequent litigation regarding patent and other intellectual property rights.
JAN101 or JAN123 may infringe the intellectual property rights of others, which could increase our costs and delay or prevent our development and commercialization efforts. Our success depends in part on avoiding infringement of the proprietary technologies of others. The pharmaceutical industry has been characterized by frequent litigation regarding patent and other intellectual property rights.
We cannot predict whether we would prevail in any such actions or that any license required under any of these patents would be made available on commercially acceptable terms, if at all. In addition, we cannot be sure that we could redesign our initial product candidate or any subsequent product candidates or processes to avoid infringement, if necessary.
We cannot predict whether we would prevail in any such actions or that any license required under any of these patents would be made available on commercially acceptable terms, if at all. In addition, we cannot be sure that we could redesign JAN101, JAN123 or any subsequent product candidates or processes to avoid infringement, if necessary.
In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval for our initial product candidate, restrict, or regulate post-approval activities and affect our ability to profitably sell our initial product candidate.
In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval for JAN101 or JAN123, restrict, or regulate post-approval activities and affect our ability to profitably sell JAN101 or JAN123.
Because of the clinical trial history of JAN101, we believe that our initial product candidate will qualify for FDA approval through the FDA’s 505(b)(2) regulatory pathway and in corresponding regulatory paths in other foreign jurisdictions.
Because of the clinical trial history of JAN101, we believe that JAN101 will qualify for FDA approval through the FDA’s 505(b)(2) regulatory pathway and in corresponding regulatory paths in other foreign jurisdictions.
Additionally, if the Licensors were to initiate legal proceedings against a third party to enforce a patent covering our initial product candidate, the defendant could counterclaim that such patent is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace.
Additionally, if the Licensors were to initiate legal proceedings against a third party to enforce a patent covering JAN101, the defendant could counterclaim that such patent is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace.
The facilities used by CoreRx to manufacture our initial product candidate must be approved by the FDA or comparable foreign regulatory authorities. Such approvals are subject to inspections that will be conducted after we submit an NDA to the FDA or their equivalents to other relevant regulatory authorities.
The facilities used by CoreRx to manufacture JAN101 must be approved by the FDA or comparable foreign regulatory authorities. Such approvals are subject to inspections that will be conducted after we submit an NDA to the FDA or their equivalents to other relevant regulatory authorities.
We will rely on our method of use and oral formulation patents to protect our initial product candidate, which may also put our initial product candidate at risk from companies developing oral formulations using the same API for other indications.
We will rely on our method of use and oral formulation patents to protect JAN101 and JAN123, which may also put JAN101 and JAN123 at risk from companies developing oral formulations using the same API for other indications.
We expect that there are other companies, including major pharmaceutical companies, working in the areas competitive to our initial product candidate that either have resulted, or may result, in the filing of patent applications that may be deemed related to our activities.
We expect that there are other companies, including major pharmaceutical companies, working in the areas competitive to JAN101 or JAN123 that either have resulted, or may result, in the filing of patent applications that may be deemed related to our activities.
Such proceedings could result in revocation or amendment of the Licensors’ patents in such a way that they no longer cover our initial product candidate or competitive products. The outcome following legal assertions of invalidity and unenforceability is unpredictable.
Such proceedings could result in revocation or amendment of the Licensors’ patents in such a way that they no longer cover JAN101 or competitive products. The outcome following legal assertions of invalidity and unenforceability is unpredictable.
Additionally, because patent applications are maintained in secrecy until the 48 application is published, we may be unaware of third-party patents that may be infringed by commercialization of our initial product candidate or any subsequent product candidate.
Additionally, because patent applications are maintained in secrecy until the application is published, we may be unaware of third-party patents that may be infringed by commercialization of JAN101, JAN123 or any subsequent product candidate.
Some of these factors are beyond our control. Broad market fluctuations may lower the market price of our common stock and affect the volume of trading in our stock, regardless of our financial condition, results of operations, business or prospect.
Some of 47 Table of Contents these factors are beyond our control. Broad market fluctuations may lower the market price of our common stock and affect the volume of trading in our stock, regardless of our financial condition, results of operations, business or prospects.
(“CoreRx”), pursuant to which CoreRx has agreed to provide to us certain product testing, development, and clinical manufacturing services.
(“CoreRx”), pursuant to which CoreRx has agreed to provide to us certain product testing, development, and clinical manufacturing services for JAN 101.
Notwithstanding the use of the FDA’s 505(b)(2) regulatory pathway, we will be required to conduct Phase IIb and Phase III studies prior to filing for marketing approval of our initial product candidate.
Notwithstanding the use of the FDA’s 505(b)(2) regulatory pathway, we will be required to conduct Phase IIb and Phase III studies prior to filing for marketing approval of JAN101.
Our ability to market our initial product candidate successfully will depend in part on the level of reimbursement that government health administration authorities, private health coverage insurers, and other organizations provide for the cost of our initial product candidate and related treatments.
Our ability to market JAN101 or JAN123 successfully will depend in part on the level of reimbursement that government health administration authorities, private health coverage insurers, and other organizations provide for the cost of JAN101 or JAN123 and related treatments.
We are not permitted to market our initial product candidate as prescription pharmaceutical products in the United States until we receive approval of an NDA from the FDA, or in any foreign countries until we receive the requisite approval from such countries.
We are not permitted to market JAN101 or JAN123 as prescription pharmaceutical products in the United States until we receive approval of an NDA from the FDA, or in any foreign countries until we receive the requisite approval from such countries.
We do not know whether additional legislative changes will be enacted, or whether the FDA regulations, guidance, or interpretations will be changed, or what the impact of such changes on the marketing approvals of our initial product candidate, if any, may be.
We do not know whether additional legislative changes will be enacted, or whether the FDA regulations, guidance, or interpretations will be changed, or what the impact of such changes on the marketing approvals of JAN101 or JAN123, if any, may be.
We will be completely dependent on third parties to manufacture our initial product candidate, and the commercialization of our initial product candidate could be halted, delayed, or made less profitable if those third parties fail to obtain manufacturing approval from the FDA or comparable foreign regulatory authorities, fail to provide us with sufficient quantities of our initial product candidate, or fail to do so at acceptable quality levels or prices .
We will be completely dependent on third parties to manufacture JAN101 and JAN123, and their commercialization could be halted, delayed, or made less profitable if those third parties fail to obtain manufacturing approval from the 38 Table of Contents FDA or comparable foreign regulatory authorities, fail to provide us with sufficient quantities of JAN101 or JAN123, or fail to do so at acceptable quality levels or prices.
Our business model depends in part on the successful development, regulatory approval, and commercialization of our initial product candidate, which may never occur.
Our business model depends in part on the successful development, regulatory approval, and commercialization of JAN101 or JAN123, which may never occur.
Obtaining and maintaining regulatory approval of our initial product candidate in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our initial product candidate in other jurisdictions.
Obtaining and maintaining regulatory approval of JAN101 or JAN123 in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of JAN101 or JAN123 in other jurisdictions.
There is no assurance that a jury and/or court would find in our favor on questions of infringement, validity, or enforceability. Even if we are successful, litigation could result in substantial costs and be a distraction to management. Risks Relating to Our Recycling Business Our revenues, earnings and cash flows will fluctuate based on changes in commodity prices.
There is no assurance that a jury and/or court would find in our favor on questions of infringement, validity, or enforceability. Even if we are successful, litigation could result in substantial costs and be a distraction to management.
Any unanticipated disruption to the operation of one of our contract manufacturers caused by problems with suppliers could delay shipment of any of our product candidates, increase our cost of goods sold and result in lost sales.
Any unanticipated disruption to the operation of one of our contract manufacturers caused by problems with suppliers could delay shipment of any of our product candidates, increase our cost of goods sold and result in lost sales. Pharmacies may be able to compound LDN in competition with us, but the economic impact may not be material.
The success of our biotechnology business is entirely dependent on our ability to obtain the marketing approval for our initial product candidate by the FDA and the regulatory authorities in foreign jurisdictions in which we intend to market our initial product candidate, of which there can be no assurance.
As of the date of this Form 10-K, we do not carry product liability insurance. The success of our biotechnology business is entirely dependent on our ability to obtain the marketing approval for our product candidates by the FDA and the regulatory authorities in foreign jurisdictions in which we intend to market them, of which there can be no assurance.
We may not be able to sell our initial product candidate profitably if adequate prices are not approved or coverage and reimbursement is unavailable or limited in scope.
We may not be able to sell JAN101 or JAN123 profitably if adequate prices are not approved or coverage and reimbursement is 45 Table of Contents unavailable or limited in scope.
These INDs were transferred to JanOne in 2020. Even though the INDs were transferred to us, the FDA may still require additional work prior to re-initiation of clinical trials.
Three INDs have previously been submitted by previous licensees/assignees of JAN101 and were accepted by the FDA. These INDs were transferred to JanOne in 2020. Even though the INDs were transferred to us, the FDA may still require additional work prior to re-initiation of clinical trials.
For example, we may be sued if any product we develop, including our initial product candidate, or any materials that we use in it, allegedly causes injury or is found to be otherwise unsuitable during product testing and manufacturing.
We will face a potential risk of product liability as a result of the clinical testing of our initial or subsequent product candidates. For example, we may be sued if any product we develop, including JAN101, JAN123 or any materials that we use in it, allegedly causes injury or is found to be otherwise unsuitable during product testing and manufacturing.
To effectively manage our Company today and this anticipated complexity, we need to remediate these material weaknesses and continue to improve our operational, financial, and management controls and our reporting systems and procedures.
We expect our systems and controls to become increasingly complex to the extent that we integrate acquisitions and if and as our business grows. To effectively manage our Company today and this anticipated complexity, we need to remediate these material weaknesses and continue to improve our operational, financial, and management controls and our reporting systems and procedures.
We have not entered into agreements with any contract manufacturers for commercial supply and may not be able to engage contract manufacturers for commercial supply of our initial or subsequent product candidates on favorable terms to us, or at all, should the need arise. 40 In a previous clinical trial, the manufacture of JAN101 by a different manufacturing company resulted in product that demonstrated initial instability that led to the product being out-of-specification.
We have not entered into agreements with any contract manufacturers for commercial supply and may not be able to engage contract manufacturers for commercial supply of our initial or subsequent product candidates on favorable terms to us, or at all, should the need arise.
Third parties may hold proprietary rights that could prevent our initial product candidate from being marketed.
Third parties may hold proprietary rights that could prevent JAN101 or JAN123 from being marketed.
In addition, Section 404 under Sarbanes-Oxley requires that we assess the design and operating effectiveness of our controls over financial reporting, which are necessary for us to provide reliable and accurate financial reports. As reported in Part II – Item 9A, Controls and Procedures, there were material weaknesses in our internal controls over financial reporting at January 1, 2022.
In addition, Section 404 under Sarbanes-Oxley 37 Table of Contents requires that we assess the design and operating effectiveness of our controls over financial reporting, which are necessary for us to provide reliable and accurate financial reports.
It is difficult and costly to protect our intellectual property rights, and we cannot ensure the protection of these rights. Our success depends on successfully blocking others from developing and commercializing similar products.
It is difficult and costly to protect our intellectual property rights, and we cannot ensure the protection of these rights. Our success depends on successfully blocking others from developing and commercializing similar products. As repurposed drugs, our APIs have previously been approved for other indications, none of which currently represent a threat to our products, and therefore cannot be protected.
Risks Relating to Our Biotechnology Segment Our biotechnology business has a limited operating history Our biotechnology business was started in September 2019 and has limited operating history. We have not commenced revenue-producing operations. To date, our biotechnology-related operations have consisted of preliminary research and development, and characterization and testing of SR TV1001 (now known as JAN101), our initial product candidate.
Risks Relating to Our Biotechnology Segment Our biotechnology business has a limited operating history Our biotechnology business was started in September 2019 and has a limited operating history. We have not commenced revenue-producing operations.
If our initial product candidate is approved but does not achieve an adequate level of acceptance by physicians, health care payors, and patients, our biotechnology business may not generate sufficient revenue to cover costs.
If JAN101 or JAN123 is approved but does not achieve an adequate level of acceptance by physicians, health care payors, and patients, our biotechnology business may not generate sufficient revenue to cover costs. Our efforts to educate the medical community and third-party payors on the benefits of JAN101 or JAN123 may require significant resources and may never be successful.
Such litigation, even if unsuccessful, could be costly to defend and divert management’s attention and resources, which could further materially harm our financial condition and results of operations. We may not be able to maintain compliance with the continued listing requirements of The Nasdaq Global Market. Our common stock is listed on the Nasdaq Global Market.
Such litigation, even if unsuccessful, could be costly to defend and divert management’s attention and resources, which could further materially harm our financial condition and results of operations.
Even if we are able to implement some or all of the initiatives of our business strategy successfully, our operating results may not improve and could decline substantially. We may be unable to complete the disposition of our recycling business.
Even if we are able to implement some or all of the initiatives of our business strategy successfully, our operating results may not improve and could decline substantially. We have identified and disclosed in this Form 10-K material weaknesses in our internal control over financial reporting.
Our initial product candidate is in the early stages of 43 development and, as of the date of this Form 10-K, we have not progressed our initial product candidate beyond early clinical studies designed only to show safety. Three INDs have previously been submitted by previous licensees/assignees of JAN101 and were accepted by the FDA.
Both JAN101 and JAN123 are in the early stages of development and, as of the date of this Form 10-K, we have not progressed JAN101 beyond early clinical studies designed only to show safety, nor has JAN123 been tested in any FDA approved clinical trials.
For example, if the approval process takes too long, we may miss market opportunities and give other companies the ability to develop competing products or establish market dominance. Any regulatory approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that renders our product candidate not commercially viable.
In addition, even if we obtain regulatory approvals, the timing or scope of any approvals may prohibit or reduce our ability to commercialize JAN101 or JAN123 successfully. For example, if the approval process takes too long, we may miss market opportunities and give other companies the ability to develop competing products or establish market dominance.
Specifically, management noted the following material weaknesses in internal control when conducting their evaluation of internal control as of January 1, 2022: (1) insufficient information technology general controls and segregation of duties. It was noted that people who were negotiating a contract were also involved in approving invoices without proper oversight.
As reported in Part II – Item 9A, Controls and Procedures, there were material weaknesses in our internal controls over financial reporting at January 1, 2022. Specifically, management noted the following material weaknesses in internal control when conducting their evaluation of internal control as of January 1, 2022: (1) insufficient information technology general controls and segregation of duties.
As part of its remediation plan, processes and procedures have been implemented to help ensure accruals and invoices are reviewed for accuracy and properly recorded in the appropriate period. 39 We expect our systems and controls to become increasingly complex to the extent that we integrate acquisitions and as our business grows.
In addition, contract-to-invoice reconciliation was not effective with certain transportation service providers. As part of its remediation plan, processes and procedures have been implemented to help ensure accruals and invoices are reviewed for accuracy and properly recorded in the appropriate period.
If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our initial or subsequent product candidates . We will face a potential risk of product liability as a result of the clinical testing of our initial or subsequent product candidates.
We believe that persons who purchase LDN from a compounding pharmacy may need to pay out-of-pocket for the product with limited or no insurance coverage. If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our initial or subsequent product candidates .
Even if we receive regulatory approval for our initial product candidate, we may not be able to commercialize it successfully and the revenue that we generate from its sales, if any, may be limited.
Even if we receive regulatory approval for JAN101 or JAN123, we may not be able to commercialize it successfully and the revenue that we generate from its sales, if any, may be limited. If approved for marketing, the commercial success of JAN101 will depend upon the product’s acceptance by the medical community, including physicians, patients, and health care payors.
In addition, the unknown effectiveness of the COVID-19 vaccines, particularly concerning variant strains of COVID-19, could lead to clinical sites terminating patient recruitment again during the course of the study. 38 If we fail to implement our biopharmaceutical business strategy or if our biopharmaceutical business strategy is ineffective, our financial performance could be materially and adversely affected.
Risks Relating to Our Business Generally If we fail to implement our biopharmaceutical business strategy or if our biopharmaceutical business strategy is ineffective, our financial performance could be materially and adversely affected.
As a repurposed drug, our API has previously been approved for other indications, none of which currently represent a threat to our product, and therefore cannot be protected.
As a repurposed drugs, our APIs have previously been approved for other indications and therefore cannot be protected. 46 Table of Contents Although none of the approved indications for the API used in JAN101 represent a threat to JAN101, the API used in naltrexone has been formulated by compounding pharmacies to treat the indication JanOne is pursuing and thus represents a real threat in commercialization of JAN123.
Removed
Risks Relating to Our Business Generally Our results of operations may be negatively impacted by the coronavirus outbreak . In December 2019, the 2019 novel coronavirus (COVID-19) surfaced in Wuhan, China. The World Health Organization declared a global emergency on January 30, 2020, and most countries initiated travel restrictions limiting travel to other countries and lock-downs within their borders.
Added
It was noted that people who were negotiating a contract were also involved in approving invoices without proper oversight.
Removed
While various vaccines have been introduced into the marketplace, the impacts of variant strains of the COVID-19 virus are still unknown. The widespread health crisis has adversely affected the global economy, resulting in an economic downturn that could impact demand for our products. To date, the outbreak had a material adverse impact on our operations.
Added
To date, our biotechnology-related operations have consisted of preliminary research and development, and characterization and testing of SR TV1001 (now known as JAN101) and our December 2022 acquisition of Soin Therapeutics and its LDN product (now known as JAN123).
Removed
For example, several customers in our appliance recycling and appliance replacement business have previously suspended our ability to pick up and or replace their customers’ appliances resulting in decreased revenues for both recycling and replacement business .
Added
(“CoreRx”), pursuant to which CoreRx has agreed to provide to us certain product testing, development, and clinical manufacturing services for JAN101. We have not yet entered into any manufacturing agreements for the manufacture of JAN123 and must identify and contract with a company capable of producing sufficient quantities of this product for our clinical trials.

… 65 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

1 edited+1 added−1 removed0 unchanged
Biggest changeITEM 2. PR OPERTIES Our executive offices are located in Las Vegas, Nevada in a leased facility consisting of 11,000 square feet of office space. Recycling Centers We lease the recycling center facilities described below.
Biggest changeITEM 2. PROPERTIES Our executive offices were located in Las Vegas, Nevada in a leased facility consisting of 11,000 square feet of office space. Effective August 2023, due to the winding down of operations of the Recycling Subsidiaries, we reduced the leased office space in the Las Vegas, Nevada facility to approximately 800 square feet. ITEM 3.
Removed
Approximate Ft 2 Location 5,000 Dartmouth, Nova Scotia 18,500 Santa Fe Springs, California 5,900 Albuquerque, New Mexico 14,600 Minneapolis, Minnesota 12,000 Indianapolis, Indiana 19,800 Franklin, Massachusetts 7,500 Commerce City, Colorado 9,200 Newark, California 12,100 Cudahy, Wisconsin 23,200 Pittsburgh, Pennsylvania 14,300 Mechanicsburg, Pennsylvania 9,600 Philadelphia, Pennsylvania 29,800 Syracuse, New York 19,224 Pennsauken, New Jersey 12,800 Sacramento, California 14,600 Norcross, Georgia 7,400 North Haven, Connecticut 11,700 Jackson, Mississippi 3,000 Baltimore, Maryland 19,200 Grand Rapids, Michigan
Added
LEGAL PROCEEDINGS The information in response to this item is included in Note 19, Commitments and Contingencies, to the Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES None. 48 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−0 removed1 unchanged
Biggest changeITEM 5. MARKET FOR OUR COMMON EQUITY, RELATED STOCKHOL DER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Dividends Our common stock trades under the symbol “JAN” on The Nasdaq Capital Market. As of March 28, 2022, there were 31 stockholders of record, which excludes stockholders whose shares were held in nominee or street name by brokers.
Biggest changeITEM 5. MARKET FOR OUR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Dividends Our common stock trades under the symbol “JAN” on The Nasdaq Capital Market. As of April 8, 2024, there were approximately 50 stockholders of record, which excludes stockholders whose shares were held in nominee or street name by brokers.
Information concerning securities authorized for issuance under equity compensation plans is included in Part III, Item 12 of this report. ITEM 6. SELECTED FINANCIAL DATA Not applicable. 53
Information concerning securities authorized for issuance under equity compensation plans is included in Part III, Item 12 of this report. ITEM 6. SELECTED FINANCIAL DATA Not applicable. 49 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

26 edited+19 added−37 removed9 unchanged
Biggest changeResults of Operations The following table sets forth certain statement of operations items from continuing operations and as a percentage of revenue, for the periods indicated (in $000's): Fiscal Year Ended Fiscal Year Ended January 1, 2022 January 2, 2021 Statement of Operations Data: Revenues $ 40,022 100.0 % $ 33,867 100.0 % Cost of revenues 31,154 77.8 % 25,040 73.9 % Gross profit 8,868 22.2 % 8,827 26.1 % Selling, general and administrative expenses 15,857 39.6 % 17,823 52.6 % Impairment charges 9,786 31.4 % — 0.0 % Operating loss (16,775 ) (41.9 )% (8,996 ) (26.6 )% Gain on debt settlement 1,872 0.0 % — 0.0 % Interest expense, net (773 ) (1.9 )% (504 ) (1.5 )% Gain (loss) on litigation settlement (1,950 ) (22.0 )% 418 4.7 % Gain on settlement of vendor advance payments 952 6.0 % 142 — Other income, net 60 0.1 % 15 0.0 % Net loss before income taxes (16,614 ) (41.5 )% (8,925 ) (26.4 )% Income tax benefit (provision) (273 ) (0.7 )% 427 1.3 % Net loss $ (16,887 ) (42.2 )% $ (8,498 ) (25.1 )% 55 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 (in $000's): Fiscal Year Ended Fiscal Year Ended January 1, 2022 January 2, 2021 Net Percent Net Percent Revenue of Total Revenue of Total Revenue Recycling and Byproducts $ 21,603 54.0 % $ 18,262 53.9 % Replacement Appliances 18,419 46.0 % 15,605 46.1 % Total Revenue $ 40,022 100.0 % $ 33,867 100.0 % Fiscal Year Ended Fiscal Year Ended January 1, 2022 January 2, 2021 Gross Gross Gross Gross Profit Profit % Profit Profit % Gross Profit Recycling and Byproducts $ 2,897 13.4 % $ 2,005 11.0 % Replacement Appliances 5,971 32.4 % 6,822 43.7 % Total Gross Profit $ 8,868 22.2 % $ 8,827 26.1 % Revenue Revenue increased by approximately $6.2 million, or 18.2%, for the fiscal year ended January 1, 2022 as compared to the fiscal year ended January 2, 2021.
Biggest changeResults of Operations The following table sets forth certain statement of operations items from continuing and discontinued operations and as a percentage of revenue, for the periods indicated (in $000’s): Fiscal Year Ended December 30, 2023 Fiscal Year Ended December 31, 2022 Statement of Operations Data: Revenues $ — $ — Cost of revenues — — Gross profit — — Selling, general and administrative expenses 4,746 3,149 Impairment charges 15,100 — Operating loss (19,846) (3,149) Interest income, net 2,250 468 Gain on litigation settlement — 1,950 Unrealized loss on marketable securities (926) (631) Gain on reversal of contingency loss — 637 Other income, net 998 2,124 Net (loss) income before provision for income taxes (17,524) 1,399 Income tax benefit (429) (6,621) Net (loss) income from continuing operations (17,095) 8,020 Income from discontinued operations 10,254 5,081 Income tax provision for discontinued operations 971 2,109 Net income from discontinued operations 9,283 2,972 Net (loss) income $ (7,812) $ 10,992 51 Table of Contents 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 (in $000’s): Fiscal Year Ended December 30, 2023 Fiscal Year Ended December 31, 2022 Net Revenue Percent of Total Net Revenue Percent of Total Revenue Revenue from discontinued operations $ 3,795 100 % $ 39,611 100 % Biotechnology — — % — — % Total revenue $ 3,795 100 % $ 39,611 100 % Fiscal Year Ended December 30, 2023 Fiscal Year Ended December 31, 2022 Gross Profit Gross Profit % Gross Profit Gross Profit % Gross Profit Gross profit from discontinued operations $ (197) (5) % $ 7,619 19 % Biotechnology — — % — — % Total gross profit $ (197) (5) % $ 7,619 19 % Revenue Revenue decreased by approximately $35.8 million for the fiscal year ended December 30, 2023, as compared to the year ended December 31, 2022.
The Company has 59 determined that the risk factors do not materially affect the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.
The Company has determined that the risk factors do not materially affect the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.
Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and potentially result in materially different results under different assumptions and conditions. ARCA Recycling’s critical accounting policies include intangible impairment under ASC 350, revenue recognition under ASC 606, and going concern under ASC 205.
Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and potentially result in materially different results under different assumptions and conditions. Critical accounting policies include intangible impairment under ASC 350, revenue recognition under ASC 606, and going concern under ASC 205.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For a description of our significant accounting policies and an understanding of the significant factors that influenced our performance during the year ended January 1, 2022, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (hereafter referred to as “MD&A”) should be read in conjunction with the consolidated financial statements, including the related notes, appearing in Part II, Item 8 of this 10-K for the fiscal year ended January 1, 2022.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For a description of our significant accounting policies and an understanding of the significant factors that influenced our performance during the fiscal year ended December 30, 2023, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (hereafter referred to as “MD&A”) should be read in conjunction with the consolidated financial statements, including the related notes, appearing in Part II, Item 8 of this 10-K for the fiscal year ended December 30, 2023.
Specific forward-looking statements contained in this portion of the Form 10-K include, but are not limited to: (i) statements relating to our initial product candidate, JAN101, including statements relating to the commencement of Phase IIb clinical trials for the treatment of PAD in 2021 and the results of those trials, (ii) statements that are based on current projections and expectations about the markets in which we operate, (iii) statements relating to the prospective sale of our Recycling business, (iv) statements about current projections and expectations of general economic conditions, (v) statements about specific industry projections and expectations of economic activity, (vi) statements relating to our future operations and prospects, (vii) statements about future results and future performance, (viii) statements that the cash on hand and additional cash generated from operations, together with potential sources of cash through issuance of debt or equity, will provide the Company with sufficient liquidity for the next 12 months, and (ix) statements that the outcome of pending legal proceedings will not have a material adverse effect on business, financial position and results of operations, cash flow, or liquidity.
Specific forward-looking statements contained in this portion of the Form 10-K include, but are not limited to: (i) statements relating to JAN 101, including statements relating to the commencement of Phase IIb clinical trials for the treatment of PAD and the results of those trials, (ii) statements that are based on current projections and expectations about the markets in which we operate, (iii) statements relating to the sale of our Recycling business, (iv) statements about current projections and expectations of general economic conditions, (v) statements about specific industry projections and expectations of economic activity, (vi) statements relating to our future operations and prospects, (vii) statements about future results and future performance, (viii) statements that the cash on hand, together with potential sources of cash through issuance of debt or equity, will provide the Company with sufficient liquidity for the next 12 months, and (ix) statements that the outcome of pending legal proceedings will not have a material adverse effect on business, financial position and results of operations, cash flow, or liquidity.
In addition, through our subsidiaries ARCA Recycling, Connexx, and ARCA Canada, we are engaged in the business of recycling major household appliances in North America by providing turnkey appliance recycling and replacement services for utilities and other sponsors of energy efficiency programs.
In addition, through our now-sold Recycling Subsidiaries (ARCA Recycling, ARCA Canada, and Connexx), we were engaged in the business of recycling major household appliances in North America by providing turnkey appliance recycling and replacement services for utilities and other sponsors of energy efficiency programs.
Off Balance Sheet Arrangements At January 1, 2022, we had no off-balance sheet arrangements, commitments or guarantees that require additional disclosure or measurement.
Off Balance Sheet Arrangements At December 30, 2023, we had no off-balance sheet arrangements, commitments or guarantees that require additional disclosure or measurement.
Future Sources of Cash; New Acquisitions, Products and Services We may require additional debt financing and/or capital to finance new acquisitions, refinance existing indebtedness or consummate other strategic investments in our business. Any financing obtained may further dilute or otherwise impair the ownership interest of our existing stockholders.
Future Sources of Cash; New Acquisitions, Products and Services We will require additional debt financing and/or capital to finance new acquisitions, conduct our Phase IIb clinical trials, or consummate other strategic investments in our business. No assurance can be given any financing obtained may not further dilute or otherwise impair the ownership interest of our existing stockholders.
Our 2021 fiscal year ended on January 1, 2022 (“fiscal 2021”). Our 2020 fiscal year ended on January 2, 2021 (“fiscal 2020”). Application of Critical Accounting Policies Our discussion of the financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States.
Application of Critical Accounting Policies Our discussion of the financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States.
We 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 non-opioid painkillers. We include Corporate expenses within the Recycling segment. Operating loss by operating segment, is defined as loss before net interest expense, other income and expense, provision for income taxes.
We 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 non-opioid painkillers. We include Corporate expenses within the Biotechnology segment.
We operate 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 operate 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: On March 19, 2023, the Company entered into a Stock Purchase Agreement with VM7 Corporation under which the it agreed to acquire our recycling segment.
Additionally, the Company has total current assets of approximately $7.6 million and total current liabilities approximately $19.4 million resulting in a net negative working capital of approximately $11.8 million. In Item 1A.
Additionally, the Company has total current assets of approximately $350,000 and total current liabilities approximately of $5.6 million, resulting in a net negative working capital of approximately $5.2 million. Cash used in operations was approximately $855,000. 54 Table of Contents In Item 1A.
Also, through our GeoTraq Inc. subsidiary, we have been engaged in the development, design of wireless transceiver modules with technology that provides LBS directly from global Mobile IoT networks. However, Our GeoTraq subsidiary has not generated any revenue to date, including in the fiscal year ended January 1, 2022.
Also, through our now-sold GeoTraq Inc. subsidiary, we were engaged in the development and design of wireless transceiver modules with technology that provides LBS directly from global Mobile IoT networks.
Cash Flows During the fiscal year ended January 1, 2022, cash used in operations was approximately $5.3 million, compared to cash used in operations of approximately $617,000 during the fiscal year ended January 2, 2021.
Cash Flows During the fiscal year ended December 30, 2023, cash used in operations was approximately $855,000, compared to cash used in operations of approximately $557,000 during the fiscal year ended December 31, 2022.
We acknowledge that we continue to face a challenging competitive environment as we continue to focus on our overall profitability, including managing expenses. We reported a net loss of approximately $16.9 million and approximately $8.5 million in fiscal 2021 and 2020, respectively.
Sources of Liquidity We acknowledge that we continue to face a challenging competitive environment as we continue to focus on our overall profitability, including managing expenses.
Cash provided by financing activities was approximately $7.4 million for the fiscal year ended January 1, 2022 was primarily due to net proceeds of approximately $5.5 million from an equity financing, and approximately $1.8 million in proceeds from notes payable, net of repayments.
Cash provided by financing activities from discontinued operations for fiscal year ended December 31, 2022 was approximately $4.0 million, and was primarily due to proceeds from the issuance of notes payable of approximately $17.5 million, partially offset by payments on notes payable of approximately $13.4 million, and payment on related party debt of approximately $162,000.
Cash used in investing activities was approximately $1.7 million for the fiscal year ended January 1, 2022, and was primarily due to purchases of property and equipment and intangibles. Cash used in investing activities of approximately $834,000 for fiscal year ended January 2, 2021 was primarily due to purchases of property and equipment and intangibles.
Cash used in investing activities was approximately $156,000 and $1.5 million, respectively, for the fiscal years ended December 30, 2023 and December 31, 2022. Cash used in investing activities was all associated with discontinued operations and was related to purchases of property and equipment. Cash provided by financing activities was approximately $777,000 for the fiscal year ended December 30, 2023.
Recycling Segment Our recycling segment consists of ARCA Recycling, Connexx, and ARCA Canada. Revenue increased by approximately $6.2 million, or 18.2%, for the fiscal year ended January 1, 2022 as compared to the fiscal year ended January 2, 2021.
Discontinued Operations 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. Operating income for the fiscal year ended December 30, 2023 increased by approximately $2.0 million, as compared to the fiscal year ended December 31, 2022.
See Note 15 of the Consolidated Financial Statements for further discussion of this matter. Other Income Other income was approximately $60,000 for the fiscal year ended January 1, 2022 as compared to income of approximately $15,000 the fiscal year ended January 2, 2021. Segment Performance We report our business in the following segments: Biotechnology, Recycling, and Technology.
Other expense, net, from discontinued operations was approximately $180,000 for the fiscal year ended December 30, 2023, as compared to expense of approximately $1.3 million for the fiscal year ended December 31, 2022. Segment Reporting We report our business in the following segments: Biotechnology and discontinued operations.
See Note 8 of the Consolidated Financial Statements for further discussion of this matter. 56 Gain (Loss) on Litigation Settlement For the year ended January 1, 2022, the Company recorded a loss on litigation settlement of approximately $2.0 million due to payments made under the terms of a settlement agreement with Gregg Sullivan.
We recorded a loss on litigation from discontinued operations of approximately $1.0 million due to an accrual of approximately $894,000 for the Skybridge settlement (see Note 19 of the Consolidated Financial Statements for further discussion of this matter), and an accrual of approximately $115,000 for adjudication of the Blackhawk matter.
Impairment Charges Impairment charges of approximately $9.8 million were recorded for the fiscal year ended January 1, 2022 due to the full impairment of our GeoTraq intangible.
The decrease is due to the disposition of our recycling segment as of March 1, 2023. Impairment Charges Impairment charges recorded during the fiscal year ended December 30, 2023 were approximately $15.1 million.
Selling, General and Administrative Expense Selling, general and administrative expense decreased by approximately $2.0 million or 11.1%, for the fiscal year ended January 1, 2022 as compared to the fiscal year ended January 2, 2021, primarily due to decreases in legal expenses, research and development costs, advertising expenses, share-based compensation expense, and professional fees, offset by increases in travel and software expenses.
Selling, General and Administrative Expense Selling, general and administrative expenses from continuing operations increased by approximately $1.6 million for the fiscal year ended December 30, 2023, as compared to the year ended December 31, 2022, primarily due to increased amortization costs relating to the Soin intangibles. Selling, general and administrative expenses from discontinued operations decreased by approximately $7.2 million.
Cash provided by financing activities was approximately $1.4 million for the fiscal year ended January 2, 2021 was related to proceeds from short term debt of approximately $3.5 million primarily associated with the Payroll Protection Program and advances from certain customers for future services and payment of $1.5 million on its related party note.
Cash used in financing activities from discontinued operations for the fiscal year ended December 30, 2023 was approximately $2.2 million and was primarily due to the repayment of debt obligations in the amount of approximately $7.3 million, partially offset by proceeds from the issuance of debt obligations of approximately $5.1 million.
Operating loss for the fiscal year ended January 1, 2022 increased by approximately $9.5 million, as compared to the fiscal year ended January 2, 2021.
Other Income, net Other income, net, from continuing operations was approximately $998,000 for the fiscal year ended December 30, 2023 as compared to income of approximately $2.1 million for the fiscal year ended December 31, 2022.
Cost of Revenue Cost of revenue increased by approximately $6.1 million, or 24.4% for the fiscal year ended January 1, 2022 as compared to the fiscal year ended January 2, 2021. Recycling and Byproducts cost of revenue increased by approximately $2.4 million, or 15.1%, which generally aligns with increases in revenue.
The decrease is due to the disposition of our recycling segment as of March 1, 2023. Cost of Revenue Cost of revenue decreased by approximately $28.0 million for the fiscal year ended December 30, 2023, as compared to the year ended December 31, 2022. The decrease is due to the disposition of our recycling segment as of March 1, 2023.
Fiscal Year Ended January 1, 2022 Fiscal Year Ended January 2, 2021 Biotechnology Recycling Technology Total Biotechnology Recycling Technology Total Revenue $ — $ 40,022 $ — $ 40,022 $ — $ 33,867 $ — $ 33,867 Cost of revenue — 31,154 — 31,154 — 25,040 — 25,040 Gross profit — 8,868 — 8,868 — 8,827 — 8,827 Selling, general and administrative expense 1,351 10,742 3,764 15,857 1,738 11,999 4,086 17,823 Impairment charges — — 9,786 9,786 — — — — Operating loss $ (1,351 ) $ (1,874 ) $ (13,550 ) $ (16,775 ) $ (1,738 ) $ (3,172 ) $ (4,086 ) $ (8,996 ) Biotechnology Segment For the fiscal years ended January 1, 2022 and January 2, 2021, respectively, our biotechnology segment incurred expenses of approximately $1.4 million and $1.7 million, related to employee costs and professional services related to research .
Fiscal Year Ended December 30, 2023 Fiscal Year Ended December 31, 2022 Biotechnology Discontinued Operations Total Biotechnology Discontinued Operations Total Revenue $ — $ 3,795 $ 3,795 $ — $ 39,611 $ 39,611 Cost of revenue — 3,992 3,992 — 31,992 31,992 Gross profit — (197) (197) — 7,619 7,619 Selling, general and administrative expense 4,746 1,467 6,213 3,149 8,652 11,801 Impairment charges 15,100 15,100 — Gain on sale of ARCA — (12,102) (12,102) — — — Gain on sale of GeoTraq — — — — (9,428) (9,428) Operating (loss) income (19,846) 10,438 (9,408) (3,149) 8,395 5,246 Biotechnology Segment For the fiscal years ended December 30, 2023 and December 31, 2022, respectively, our Biotechnology segment incurred operating expenses of approximately $10.1 million and $3.1 million.
Removed
Consequently, during the year ended January 1, 2022, the Company took a full write-down of the unamortized portion of the GeoTraq intangible asset of approximately $9.8 million (see Note 8 to the Consolidated Financial Statements below).
Added
The results for this segment for the years ended December 30, 2023 and December 31, 2022 are reported as discontinued operations below. • Technology: We have suspended all operations for GeoTraq, and, on May 24, 2022, sold substantially all of the GeoTraq assets to an otherwise unrelated third party.
Removed
We receive fees charged for recycling, replacement and additional services for utility energy efficiency programs and have established 20 Regional Processing Centers (“RPCs”) for this segment throughout the United States and Canada • Technology: GeoTraq is currently in the process of suspending all operations. 54 Reporting Period. We report on a 52-or 53-week fiscal year.
Added
The results for this segment for the years ended December 30, 2023 and December 31, 2022 are reported as discontinued operations below. 50 Table of Contents Reporting Period. We report on a 52-or 53-week fiscal year. Our 2023 fiscal year ended on December 30, 2023 (“fiscal 2023”). Our 2022 fiscal year ended on December 31, 2022 (“fiscal 2022”).
Removed
Recycling and Byproducts revenue increased by approximately $3.3 million, or 18.3%, primarily due to increases in scrap revenues due to stronger commodity markets. Replacement Appliances revenue increased by approximately $2.9 million or 18.0%, primarily due to increased sales volume.
Added
These charges relate to the full impairment of the VM7 and SPYR notes receivable of approximately $5.3 million and $9.8 million, respectively (See Note 8 of the Consolidated Financial Statements). No impairment charges were recorded during the fiscal year ended December 31, 2022.
Removed
Replacement Appliances cost of revenue increased by approximately $3.7 million or 41.7%, primarily due to a change in business mix during the year ended January 1, 2022 as opposed to the prior period.
Added
Interest Income, net Interest income, net, increased by approximately $1.8 million for the fiscal year ended December 30, 2023, as compared to the year ended December 31, 2022, primarily due to the accretion of discount in connection with the promissory notes with SPYR and VM7, as well as interest recorded on the note with SPYR.
Removed
Interest Expense, net Interest expense, net, increased by approximately $269,000 or 53.4%, for the fiscal year ended January 1, 2022 as compared to the fiscal year ended January 2, 2021 primarily due to an increase in equipment-related borrowing.
Added
Gain on Sale of the Recycling Subsidiaries During the fiscal year ended December 30, 2023, we recorded a gain on the sale of the Recycling Subsidiaries of approximately $12.1 million from discontinued operations.
Removed
See Note 15 of the Consolidated Financial Statements for further discussion of this matter.
Added
See Note 4 of the Consolidated Financial Statements. 52 Table of Contents Gain on Sale of GeoTraq During the fiscal year ended December 31, 2022, we recorded a gain on the sale of GeoTraq of approximately $9.4 million from discontinued operations. See Note 5 of the Consolidated Financial Statements.
Removed
For the year ended January 2, 2021, the Company recorded a net gain on litigation settlement of approximately $418,000, comprised of an $800,000 gain on settlement of litigation with a former service provider (discussed below), partially offset by a loss on settlement of outstanding payables of approximately $382,000.
Added
Unrealized Loss on Marketable Securities Unrealized loss on marketable securities for the fiscal year ended December 30, 2023 was approximately $926,000, as compared to a loss of approximately $631,000 for the fiscal year ended December 31, 2022.
Removed
We identified these segments based on a combination of business type, customers serviced, and how we divide management responsibility. Our revenues and profits are driven through our recycling centers, e-commerce, individual sales representatives, and our internet services for our recycling and technology segment.
Added
An unrealized gain or loss on marketable securities is recorded to mark to fair value securities received in connection to the sale of GeoTraq.
Removed
Recycling and Byproducts revenue increased by approximately $3.3 million, or 18.3%, primarily due to increases in scrap revenues as a result of stronger commodity markets. Replacement Appliances revenue increased by approximately $2.8 million or 18.0%, primarily due to increased sales volume.
Added
Gain (Loss) on Litigation Settlement, net For the year ended December 31, 2022, we recorded a gain on litigation settlement from continuing operations of approximately $1.95 million due to the receipt of a payment from Sompo International Companies (“Sompo”) in exchange for a full release in favor of Sompo from liability for both the GeoTraq and SEC-related matters.
Removed
Cost of revenue increased by approximately $6.1 million, or 24.4%, for the fiscal year ended January 1, 2022, as compared to the fiscal year ended January 2, 2021, primarily due to a change in business mix during the year ended January 1, 2022 as compared to the prior period.
Added
Gain on Reversal of Contingency Loss For the year ended December 31, 2022, we recorded a gain on reversal of contingency liabilities of approximately $637,000 relating to guarantees of ApplianceSmart leases that no longer exist as a result of ApplianceSmart's emergence from bankruptcy. See Note 19 of the Consolidated Financial Statements.
Removed
Operating loss for the fiscal year ended January 1, 2022, decreased approximately $1.3 million, or 41.0%, as compared to the prior year period. The decrease in operating loss was due to decreases in selling, general and administrative expenses.
Added
As discussed above, we sold our Technology segment, GeoTraq, during the fiscal year ended December 31, 2022, and our Recycling segment in March 2023, and detail those results as discontinued operations below. Operating income (loss) by operating segment, is defined as income (loss) before net interest expense, other income and expense, provision for income taxes.
Removed
The decrease in selling, general and administrative expense is primarily due to decreases in selling, 57 professional fees, research and development, and share-based compensation expenses, offset by increases in travel and software expenses. Technology Segment Our technology segment consists of GeoTraq.
Added
The increase is primarily related to the $5.3 million 53 Table of Contents full impairment of the VM7 note receivable from the Recycling Subsidiaries transaction, as well as increased amortization costs relating to the Soin intangibles.
Removed
The increase in operating loss is primarily due to the full impairment of the GeoTraq intangible, in the amount of approximately $9.8 million (see Note 8 to the Consolidated Financial Statements below), offset by general decreases in payroll, professional fees, and other operating expenses.
Added
The increase in operating income is primarily due to the gain on sale of the Recycling Subsidiaries of approximately $12.1 million during fiscal 2023, partially offset by the gain on the sale of the GeoTraq intangible, in the amount of approximately $9.4 million during the year ended December 31, 2022, as well as reduced operating expenses for the year ended December 30, 2023 due to the sale of the Recycling Subsidiaries.
Removed
Liquidity and Capital Resources Overview As of January 1, 2022, we had total cash on hand of approximately $705,000.
Added
Liquidity and Capital Resources Overview The accompanying financial statements have been prepared under the assumption that we will continue as a going concern. Such assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As of December 30, 2023, our cash on hand was approximately $5,000.
Removed
As we continue to prepare to begin late-stage clinical development with our pharmaceutical product, JAN101, a nd potentially 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.
Added
We intend to raise funds to support future development of JAN 123 either through capital raises or structured arrangements. Our ability 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, as well as to fund our day-to-day operations.
Removed
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.
Added
The accompanying financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. While we will actively pursue these additional sources of financing, management cannot make any assurances that such financing will be secured.
Removed
In December 2019, the 2019 novel coronavirus (COVID-19) surfaced in Wuhan, China. The World Health Organization declared a global emergency on January 30, 2020, and most countries initiated travel restrictions limiting travel to other countries and lock-downs within their borders.
Added
Cash provided by operating activities from discontinued operations during the fiscal year ended December 30, 2023 was approximately $2.3 million, as compared to cash used in operating activities of approximately $2.5 million for the fiscal year ended December 31, 2022. The changes in cash was primarily due to results of operations as discussed above.
Removed
While various vaccines have recently been introduced into the marketplace, the impacts of variant strains of the COVID-19 virus is still unknown. The widespread health crisis has adversely affected the global economy, resulting in an economic downturn that could impact demand for our products. To date, the outbreak had a material adverse impact on our operations.
Added
Cash used by financing activities was approximately $14,000 for the fiscal year ended December 31, 2022.
Removed
For example, several customers in our appliance recycling and appliance replacement business have previously suspended our ability to pick up and or replace their customers’ appliances resulting in decreased revenues for both recycling and replacement business .
Added
We reported a net loss of approximately $7.7 million from continuing operations for the fiscal year ended December 30, 2023, and net income from continuing operations of approximately $8.0 million for the fiscal year ended December 31, 2022, for the reasons discussed above.
Removed
The future impact of the outbreak is highly uncertain and cannot be predicted and there is no assurance that the outbreak will not have another material adverse impact on the future results of the Company. The extent of the impact, if any, will depend on future developments, including actions taken to contain the coronavirus.
Removed
A key task for the Company in 2021 was to begin late-stage clinical development with its pharmaceutical product, JAN101. However, the COVID-19 pandemic significantly impacted clinical trials in 2020, delaying recruitment in most non-COVID-19 clinical trials and even eliminating recruitment in some trials.
Removed
While clinical sites have largely resumed conducting non-COVID-19 clinical trials, the backlog of subjects may adversely affect our ability to recruit for its trial, leading to longer and more expensive trials.
Removed
In addition, the unknown effectiveness of the COVID-19 vaccines, particularly concerning variant strains of COVID-19, could lead to clinical sites terminating patient recruitment again during the course of the study.
Removed
On May 1, 2020, the Company entered into a promissory note (the “PPP Promissory Note”) with Texas Capital Bank, N.A. that provides for a loan in the amount of approximately $1.9 million (the “PPP Loan”) pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”).
Removed
The PPP Loan was to mature on April 27, 2022 and bore interest at a rate of 1.0% per annum. Monthly amortized principal and interest payments were deferred for six months after the date of disbursement. The PPP Promissory Note contained events of default and other provisions customary for a loan of this type.
Removed
The Paycheck Protection Program provides that the use of PPP Loan amount is limited to certain qualifying expenses and may be partially or wholly forgiven in accordance with the requirements set forth in the CARES Act. The Company has applied for forgiveness of the PPP loan in accordance with the terms of the CARES Act to the extent applicable.
Removed
The full amount of the PPP Loan was forgiven during the first quarter of fiscal 2021, and, consequently, we recorded a gain due to debt forgiveness.
Removed
As of the period ending September 26, 2020, the Company received advance payments authorized by the California Public Utilities Commission and processed through two California utilities for the purposes of sustaining the workforce during the COVID 19 pandemic shutdown. The use of these funds was limited to labor and labor benefits 58 for impacted employees.
Removed
Portions of these advances are forgivable if certain conditions are met the specifics that have not been finalized. Advance payments that are not forgiven will need to be repaid in full by December 31, 2021. Total funding received under this program, as of September 26, 2020, amounted to approximately $1.2 million.
Removed
As of January 1, 2022, approximately $1.1 million had been forgiven, and approximately $74,000 had been repaid.
Removed
On January 29, 2021, the Company entered into a Securities Purchase Agreement with certain institutional investors for the sale by the Company in a registered direct offering (the “S-3 Offering”) of 571,428 shares of the Company’s common stock at a pre-share purchase price of $10.50.
Removed
On February 2, 2021, the S-3 Offering closed and the Company received gross proceeds of approximately $6.0 million, before deducting placement agent fees and other offering expenses. The Company is utilizing the net proceeds for general working capital.
Removed
Based on our current operating plans, we believe that available cash balances, funds available under our factoring agreement with Prestige Capital Finance, LLC (“Prestige Capital”), availability under our revolving related party loan, and/or other refinancing of existing indebtedness will provide sufficient liquidity to fund our operations for at least the next 12 months.
Removed
The increase in cash used in operations was primarily due to the increase in net loss, as discussed above, changes in assets and liabilities, as well as noncash increases in PPP debt forgiveness and settlement of vendor advanced payments, offset by a noncash increase in impairment charges (see Note 8 to the Consolidated Financial Statements below).
Removed
Sources of Liquidity We utilize cash on hand and on occasion factor certain accounts receivable invoices to cover normal and seasonal fluctuations in cash flow 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.

… 2 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

0 edited+2 added−4 removed0 unchanged
Removed
ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK Market Risk and Impact of Inflation Interest Rate Risk . We do not believe there is any significant risk related to interest rate fluctuations on our short and long-term fixed rate debt. Foreign Currency Exchange Rate Risk . We currently generate revenues in Canada.
Added
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As of December 30, 2023, we did not participate in any market risk-sensitive commodity instruments for which fair value disclosure would be required.
Removed
The reporting currency for our consolidated financial statements is United States 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.
Added
We believe we are not subject in any material way to other forms of market risk, such as foreign currency exchange risk or foreign customer purchases or commodity price risk. 55 Table of Contents
Removed
We estimate that the overall strength of the United States dollar against the Canadian dollar had an immaterial impact on the revenues and net income for the fiscal year ended January 1, 2022. We do not currently hedge foreign currency fluctuations and do not intend to do so for the foreseeable future.
Removed
We do not hold any derivative financial instruments, nor do we hold any securities for trading or speculative purposes. 60

Other ALTS 10-K year-over-year comparisons