PART I - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

JANEL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, September 30,
2017 2016
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,889,468 $ 965,115
Accounts receivable, net of allowance for doubtful accounts of $242,270 and $230,000, respectively 13,323,679 12,353,582
Inventory 332,365 356,875
Prepaid expenses and sundry current assets 314,059 233,716
Total current assets 15,859,571 13,909,288
PROPERTY AND EQUIPMENT, NET 338,218 287,391
OTHER ASSETS
Intangible assets, net (Note 3) 12,041,771 12,373,266
Goodwill 9,101,858 8,443,477
Deferred income taxes 587,983 844,977
Security deposits 122,246 99,658
Total other assets 21,853,858 21,761,378
Total assets $ 38,051,647 $ 35,958,057

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable - banks (Note 4) $ 6,674,311 $ 6,498,403
Note payable - related party, net of imputed interest (Note 5) 492,635 500,000
Accounts payable - trade 11,635,006 9,298,029
Accrued expenses and other current liabilities 1,832,335 1,254,926
Dividends payable 994,945 623,077
Note payable – other - -
Current portion of long-term debt 857,148 857,148
Total current liabilities 22,486,380 19,031,583
OTHER LIABILTIES
LONG-TERM DEBT – BANK
Long-term debt (Note 4) 3,640,179 4,616,540
Long-term debt - related party, net of imputed interest (Note 5) - 471,108
Deferred compensation 78,568 78,568
Total other liabilities 3,718,747 5,166,216
Total liabilities 26,205,127 24,197,799
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value; 100,000 shares authorized
Series A 20,000 shares authorized and 20,000 shares issued and outstanding at both dates 20 20
Series B 5,700 shares authorized and 1,271 shares issued and outstanding at both dates 1 1
Series C 20,000 shares authorized and 14,205 shares issued and outstanding at both dates 15 15
Common stock, $0.001 par value; 4,500,000 shares authorized, 573,951 shares issued and 553,951 and 573,951 shares outstanding, respectively 574 574
Paid-in capital 12,710,441 12,920,416
Treasury stock, at cost 20,000 shares (Note 6) (240,000 ) -
Accumulated deficit (1,700,803 ) (2,161,994 )
Total Janel Corporation stockholders' equity 10,770,248 10,759,032
Non-controlling interest 1,076,272 1,001,226
Total stockholders' equity 11,846,520 11,760,258
Total liabilities and stockholders' equity $ 38,051,647 $ 35,958,057

(in thousands, except share and per share data)

(Unaudited)

June 30,
2022
September 30,
2021

ASSETS
Current Assets:
Cash

$
3,836
$ 6,234
Accounts receivable, net of allowance for doubtful accounts

61,984

52,312

Inventory, net

4,133

3,227

Prepaid expenses and other current assets

3,726

3,002

Total current assets
73,679

64,775

Property and Equipment, net
5,103

4,977

Other Assets:
Intangible assets, net

22,689

24,173

Goodwill

18,598

18,486

Operating lease right of use asset

5,505

2,936

Security deposits and other long-term assets

532

577

Total other assets
47,324

46,172

Total assets
$
126,106

$
115,924

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Line of credit

$
22,920
$ 29,637
Accounts payable – trade

47,585

37,243

Accrued expenses and other current liabilities

8,276

6,311

Dividends payable

1,673

2,427

Current portion of earnout

1,054

1,054

Current portion of deferred acquisition payments

192

188

Current portion of subordinated promissory note-related party

450

550

Current portion of long-term debt

874

868

Current portion of operating lease liabilities

1,623

1,281

Total current liabilities 84,647 79,559
Other Liabilities:
Long-term debt

4,017

4,744

Long-term portion of earnout

2,546

2,546

Subordinated promissory notes-related party

5,475

5,525

Long-term portion of deferred acquisition payments

187

183

Mandatorily redeemable non-controlling interest

841

783

Deferred income taxes

2,114

2,299

Long-term operating lease liabilities

4,047

1,751

Other liabilities

371

415

Total other liabilities
19,598

18,246

Total liabilities
104,245

97,805

Stockholders’ Equity:
Preferred Stock, $0.001 par value; 100,000 shares authorized

Series B 5,700 shares authorized, 0 shares issued and outstanding as of June 30, 2022 and 31 shares issued and outstanding as of September 30, 2021

0

0

Series C 30,000 shares authorized and 11,368 and 20,960 shares issued and outstanding at June 30, 2022 and September 30, 2021, liquidation value of $7,357 and $12,907 at June 30, 2022 and September 30, 2021, respectively

0

0

Common stock, $0.001 par value; 4,500,000 shares authorized, 1,077,718 issued and 1,057,718 outstanding as of June 30, 2022 and 962,207 issued and 942,207 outstanding as of September 30, 2021

1

1

Paid-in capital

13,461

14,838

Common Treasury stock, at cost, 20,000 shares

(240
)

(240
)
Accumulated earnings

8,639

3,520
Total stockholders’ equity
21,861

18,119

Total liabilities and stockholders’ equity
$
126,106

$
115,924

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

~~- 3 -~~

Table of Contents

JANEL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)

Three months ended
June 30, Nine months ended
June 30,
2017 2016 2017 2016

REVENUES
Global Logistics Services $ 17,963,837 $ 15,425,092 $ 49,499,193 $ 53,935,789
Manufacturing 2,283,041 2,080,361 6,444,205 2,792,667
TOTAL REVENUES 20,246,878 17,505,453 55,943,398 56,728,456
COST AND EXPENSES
Forwarding expenses 14,455,926 12,157,139 39,810,183 44,171,758
Cost of revenues - manufacturing 989,313 961,587 2,888,458 1,266,878
Selling, general and administrative 4,002,311 3,460,936 11,206,459 9,798,908
Amortization of intangible assets 195,666 203,237 578,997 402,915
TOTAL COSTS AND EXPENSES 19,643,216 16,782,899 54,484,097 55,640,459

INCOME FROM OPERATIONS 603,662 722,554 1,459,301 1,087,997
OTHER ITEMS
Interest expense, net of interest income (184,280 ) (199,892 ) (566,807 ) (476,665 )
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 419,382 522,662 892,494 611,332
Income taxes (129,419 ) (36,604 ) (356,257 ) (75,181 )
NET INCOME FROM CONTINUING OPERATIONS 289,963 486,058 536,237 536,151
Loss from discontinued operations, net of tax - (1,668 ) - (184,845 )
NET INCOME 289,963 484,390 536,237 351,306
Less: net income attributable to non-controlling interests 30,943 35,331 75,046 49,636
NET INCOME ATTRIBUTABLE TO JANEL CORPORATION STOCKHOLDERS 259,020 449,059 461,191 301,670

Preferred stock dividends (127,706 ) (133,819 ) (383,118 ) (262,165 )
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 131,314 $ 315,240 $ 78,073 $ 39,505
Income per share from continuing operations attributable to common stockholders: Basic $ 0.52 $ 0.85 $ 0.95 $ 0.93
Diluted $ 0.42 $ 0.78 $ 0.77 $ 0.87

(Loss) per share from discontinued operations attributable to common stockholders: Basic $ - $ - $ - $ (0.32 )
Diluted $ - $ - $ - $ (0.32 )

Net income (loss) per share attributable to common stockholders: Basic $ 0.24 $ 0.55 $ 0.14 $ 0.07
Diluted $ 0.19 $ 0.51 $ 0.11 $ 0.06

Basic weighted average number of shares outstanding 553,951 573,951 567,309 573,951
Fully-diluted weighted average number of shares outstanding 686,699 622,624 693,332 613,865

Three Months Ended
June 30,

Nine Months Ended
June 30,

2022

2021

2022

2021

Revenue
$ 78,984
$
34,826
$ 243,149 $ 91,446
Forwarding expenses and cost of revenues

61,819

26,058

193,986

68,680

Gross profit
17,165

8,768

49,163

22,766

Cost and Expenses:
Selling, general and administrative

13,505

7,158

39,718

19,282

Amortization of intangible assets

489

288

1,485

832

Total Costs and Expenses
13,994

7,446

41,203

20,114

Income from Operations
3,171

1,322

7,960

2,652

Other Items:
Interest expense

(299
)

(141
)

(847
)

(418
)
Gain on Paycheck Protection Program loan forgiveness

0

0

0

135

Income Before Income Taxes
2,872

1,181

7,113

2,369

Income tax expense

(714
)

(311
)

(1,994
)

(648
)
Net Income
2,158 870 5,119 1,721
Preferred stock dividends

(71
)

(197
)

(515
)

(566
)
Non-controlling interest dividends
0 0 (61 ) 0
Net Income Available to Common Stockholders
$
2,087

$
673

$
4,543

$
1,155

Net income per share

Basic

$
2.04

$
0.93

$
5.13

$
1.84

Diluted

$
1.93

$
0.88

$
4.85

$
1.75

Net income per share attributable to common stockholders:

Basic

$
1.97

$
0.73

$
4.56

$
1.24

Diluted

$
1.87

$
0.68

$
4.31

$
1.17

Weighted average number of shares outstanding:

Basic

1,057.7

939.6

996.9

937.2

Diluted

1,116.6

994.8

1,055.0

981.8

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

~~- 4 -~~

Table of Contents

JANEL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF ~~CHANGES IN~~ STOCKHOLDERS’ EQUITY

(in thousands, except share and per share data)

(Unaudited)

Common Stock Preferred Stock Paid-in Accumulated Treasury Stock Non-
Controlling Total
Shares $ Shares $ Capital Deficit Shares $ TOTAL Interest Equity

Balance - September 30, 2016 573,951 $ 574 35,476 $ 36 $ 12,920,416 $ (2,161,994 ) - - $ 10,759,032 $ 1,001,226 $ 11,760,258
Net income - - - - - 461,191 - - 461,191 75,046 $ 536,237
Dividends to preferred stockholders - - - - (383,118 ) - - - (383,118 ) - $ (383,118 )
Stock-based compensation - - - - 173,143 - - - 173,143 - $ 173,143
Treasury stock acquired - - - - - - 20,000 (240,000 ) (240,000 ) - $ (240,000 )
Balance - June 30, 2017 573,951 $ 574 35,476 $ 36 $ 12,710,441 $ (1,700,803 ) 20,000 $ (240,000 ) $ 10,770,248 $ 1,076,272 $ 11,846,520

PREFERRED STOCK COMMON STOCK PAID-IN CAPITAL
COMMON
TREASURY STOCK
ACCUMULATED EARNINGS
TOTAL EQUITY
SHARES
$
SHARES $

$
SHARES
$
$

$

Balance - September 30, 2021 20,991 0 962,207 $ 1 $ 14,838 20,000 $ (240 ) $ 3,520 $ 18,119
Net Income —
0 — 0 0 — 0 1,688 1,688
Dividends to preferred stockholders —
0 — 0 (211 ) — 0 0 (211 )
Stock-based compensation —
0 — 0 29 — 0 0 29
Stock option exercise 0 0 17,500 0 85 0 0 0 85
Balance - December 31, 2021 20,991 0 979,707 1 14,741 20,000 (240 ) 5,208 19,710
Net Income — 0 — 0 0 — 0 1,273 1,273
Dividends to preferred stockholders — 0 — 0 (233 ) — 0 0 (233 )
Dividends to non-controlling interest
— 0 — 0 (61 ) — 0 0 (61 )
Preferred C shares purchased
(4,687 ) 0 0 0 (1,731 ) — — 0 (1,731 )
Preferred C shares converted
(4,905 ) 0 65,205 0 0 — — 0 0
Preferred B shares converted
(31 ) 0 306 0 0 — — 0 0
Stock based compensation 0 0 15,000 — 718 0 0 0 718
Stock options exercise
0 0 17,500 0 76 0 0 0 76
Balance - March 31, 2022
11,368 $ 0 1,077,718 $ 1 $ 13,510 20,000 $ (240 ) $ 6,481 $ 19,752
Net Income
— 0 — 0 0 — 0 2,158 2,158
Dividends to preferred stockholders
— 0 — 0 (71 ) — 0 0 (71 )
Stock based compensation
— 0 — 0 22 — 0 0 22
Balance – June 30, 2022 11,368 $
0 1,077,718 $
1 $
13,461 20,000 $
(240 ) $
8,639 $
21,861

PREFERRED STOCK COMMON STOCK PAID-IN CAPITAL
COMMON
TREASURY STOCK
ACCUMULATED EARNINGS (DEFICIT) TOTAL EQUITY
SHARES
$
SHARES $

$
SHARES
$
$

$

Balance - September 30, 2020 19,791 0 918,652 $ 1 $ 14,604 20,000 $ (240 ) $ (1,683 ) $ 12,682
Net Income
—
0 — 0 0 — 0 255 255
Dividends to preferred stockholders — 0 — 0 (174 ) — 0 0 (174 )
Stock-based compensation — 0 — 0 10 — 0 0 10
Stock options exercise 0 0 2,502 0 21 0 0 0 21
Balance - December 31, 2020 19,791 0 921,154 1 14,461 20,000 (240 ) (1,428 ) 12,794
Net Income
— 0 — 0 0 — 0 596 596
Dividends to preferred stockholders — 0 — 0 (195 ) — 0 0 (195 )
Stock based compensation — 0 — 0 12 — 0 0 12
Balance - March 31, 2021
19,791 $ 0 921,154 $ 1 $ 14,278 20,000 $ (240 ) $ (832 ) $ 13,207
Net Income
— 0 — 0 0 — 0 870 870
Dividends to preferred stockholders
— 0 — 0 (197 ) — 0 0 (197 )
Stock based compensation
— 0 — 0 13 — 0 0 13
Stock options exercise 0 0 6,053 0 25 0 0 0 25
Balance – June 30, 2021 19,791 $
0 927,207 $
1 $
14,119 20,000 $
(240 ) $
38 $
13,918

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

~~- 5 -~~

statements.

Table of Contents

JANEL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

Nine months ended June 30,
2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 536,237 $ 351,306
Plus (loss) from discontinued operations - 184,845
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Bad debt expense 82,460 341
Depreciation 85,291 62,592
Deferred income tax 256,994 -
Amortization of intangible assets 578,997 402,915
Amortization of imputed interest 21,526 41,954
Stock based compensation 173,143 91,492
Changes in operating assets and liabilities:
Accounts receivable (753,754 ) 1,942,323
Inventory 24,510 (49,397 )
Prepaid expenses and sundry current assets (87,655 ) (64,279 )
Accounts payable and accrued expenses 1,910,937 (1,924,522 )
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,828,686 1,039,570
NET CASH USED IN DISCONTINUED OPERATIONS - (184,845 )
2,828,686 854,725
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (136,118 ) (307,550 )
Cash acquired from acquisition 115,986 -
Acquisition of subsidiary (100,000 ) (10,734,663 )
NET CASH USED IN INVESTING ACTIVITIES (120,132 ) (11,042,213 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (11,250 ) (11,250 )
Proceeds (payments) from bank loans (1,032,951 ) 5,479,229
Proceeds from sale of preferred series C shares - 4,352,663
Repayment of notes payable - related party (500,000 ) -
Treasury stock acquisition (240,000 ) -
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (1,784,201 ) 9,820,642
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 924,353 (366,846 )
CASH AND CASH EQUIVALENTS, beginning of the period 965,115 942,748
CASH AND CASH EQUIVALENTS, end of period $ 1,889,468 $ 575,901

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 545,281 $ 476,665
Income taxes $ 145,470 $ 75,181
Non-cash financing activities:
Dividends declared to preferred stockholders $ 371,868 $ 262,165
Acquisition of business:
Intangible assets acquired $ 898,381 $ 12,102,838

Nine Months Ended
June 30,

2022

2021

Cash Flows From Operating Activities:
Net income

$
5,119
$ 1,721
Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Provision for (recovery of) uncollectible accounts

354

(22
)
Depreciation

351

265

Deferred income tax provision

(185
)

488

Amortization of intangible assets

1,485

832

Amortization of acquired inventory valuation

393

732

Amortization of loan costs

7

7

Stock-based compensation

800

85

Gain on Paycheck Protection Program loan forgiveness 0 (135 )
Changes in fair value of mandatorily redeemable noncontrolling interest

58

86

Changes in operating assets and liabilities, net of effects of acquisitions:

Accounts receivable

(10,026
)

(6,558
)
Inventory

(1,299
)

(319
)
Prepaid expenses and other current assets

(724
)

(205
)
Security deposits and other long-term assets

44

6

Accounts payable and accrued expenses

12,275

3,144

Other liabilities

26

12

Net cash provided by operating activities 8,678 139
Cash Flows From Investing Activities:
Acquisition of property and equipment, net of disposals

(477
)

(127
)
Acquisitions

(112
)

(2,874
)
Net cash (used in) investing activities (589 ) (3,001 )
Cash Flows From Financing Activities:
Repayments of term loan

(728
)

(1,333
)
Proceeds from stock options exercise

161

46

Line of credit, (payments) proceeds, net

(6,717
)

4,539

Repayment of subordinated promissory notes

(142
)

(813
)
Dividends paid to minority shareholders (61 ) 0
Dividends paid to preferred stockholders
(657 ) 0
Repurchase of Series C Preferred Stock (2,343 ) 0
Net cash (used in) provided by financing activities
(10,487
)

2,439

Net (decrease) in cash

(2,398
)

(423
)
Cash at beginning of the period

6,234

3,349

Cash at end of period
$
3,836

$
2,926

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:

Interest

$
597

$
361

Income taxes

$
1,261

$
38

Non-cash operating activities:
Gain on Paycheck Protection Program loan forgiveness $ 0 $ 135
Non-cash investing activities:
Purchase price adjustments-ELFS
$ 112 0
Due to seller 338 election 0 $ 30
Subordinated promissory notes of ICT $ 0 $ 1,760
Non-cash financing activities:

Dividends declared to preferred stockholders

$
515

$
566

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

~~- 6 -~~

Table of Contents

JANEL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data)

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying interim unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of Article 108 of Regulation S-X and the instructions to Form 10-Q of the Securities and Exchange Commission. As a result, certain information and footnote disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. Janel Corporation ~~(together with its subsidiaries, “the Company”~~(the “Company” or “Janel”) believes that the disclosures made are adequate to make the information presented not misleading. The condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for a full fiscal year, or any other period. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Form 10-K as filed with the Securities and Exchange ~~Commission on or about December 22, 2016.~~

~~ACQUISITIONS~~

~~INDCO, Inc. (“INDCO”)~~

~~General.~~ ~~On March 21, 2016,~~Commission.

Revenue and revenue recognition

Logistics

Revenue is recognized upon transfer of control of promised services to customers. With respect to its Logistics segment, the Company ~~executed~~has determined that, in general, each shipment transaction or service order constitutes a separate contract with the customer. When the Company provides multiple services to a customer, different contracts may be present for different services.

The Company typically satisfies its performance obligations as services are rendered at a point in time. A typical shipment would include services rendered at origin, such as pick-up and ~~closed~~delivery to port, freight services from origin to destination port and destination services, such as customs clearance and final delivery. The Company measures the performance of its obligations as services are completed at a ~~Stock Purchase Agreement (the “INDCO Purchase Agreement”)~~point in time during the life of a shipment, including services at origin, freight and destination. The Company fulfills nearly all of its performance obligations within a one- to two-month period.

The Company evaluates whether amounts billed to customers should be reported as gross or net revenue. Generally, revenue is recorded on a gross basis when the Company is acting as principal and is primarily responsible for fulfilling the promise to provide the services, when it has discretion in setting the prices for the ~~purchase~~services to the customers, and the Company has the ability to direct the use of the services provided by the third party. Revenue is recognized on a net basis when the Company is acting as agent and we do not have latitude in carrier selection or in establishing rates with the carrier.

Table of Contents

In the Logistics segment, the Company disaggregates its revenues by its 5 primary service categories: ocean freight, trucking, air freight, customs brokerage, and other. A summary of the ~~outstanding common stock (the “INDCO Shares”)~~Company’s revenues disaggregated by major service lines for the three and nine months ended June 30, 2022 and 2021 was as follows (in thousands):

	Three Months Ended June 30,		Three Months Ended June 30,		Nine Months Ended June 30,		Nine Months Ended June 30,
	2022		2021		2022		2021
Service Type
Ocean freight	$	28,633	$	13,082	$	93,794	$	33,556
Trucking		24,920		5,051		70,234		14,104
Air freight		13,716		7,735		40,653		18,808
Other		3,619		25		12,064		83
Customs brokerage		2,796		3,476		9,568		9,451
Total	$	73,684	$	29,369	$	226,313	$	76,002

Life Sciences and Manufacturing

Revenues from the Life Sciences segment are derived from the sale of ~~INDCO,~~high-quality monoclonal and polyclonal antibodies, diagnostic reagents and diagnostic kits and other immunoreagents for biomedical research and antibody manufacturing. Revenues from the Company’s Manufacturing segment, which is comprised of Indco, a majority-owned subsidiary of the Company that manufactures and distributes ~~industrial~~ mixing ~~equipment. The INDCO Shares represent approximately 91.65%~~equipment and apparatus for specific applications within various industries (“Indco”), are derived from the engineering, manufacture and delivery of specialty mixing equipment and accessories. Revenues for Life Sciences and Manufacturing are recognized when products are shipped and risk of loss is transferred to the carrier(s) used.

2.	ACQUISITION

Fiscal 2021 Acquisition

Logistics

On September 21, 2021, the Company completed the acquisition of all of the ~~beneficial ownership~~membership interests of ~~INDCO.~~Expedited Logistics and Freight Services, LLC (“ELFS”) and ELFS Brokerage LLC, a wholly-owned subsidiary of ELFS. The ~~remaining 8.35% ownership was retained by existing INDCO management.~~

~~Under the terms of the INDCO Purchase Agreement, the~~ purchase price for the ~~INDCO shares~~membership interests was ~~$11,000,000,~~$19,000, subject to certain closing adjustments ~~and customary indemnifications, representations and warranties. The~~as set forth in the related purchase ~~price was paid at~~agreement. Further earnout payments in an amount not anticipated to exceed $4,500 will be due to the former members of ELFS based on the operating profit earned by ELFS. Upon the closing ~~in cash.~~

~~INDCO comprises the Manufacturing segment~~ of the ~~Company.~~

~~Purchase Price Allocation~~~~. In accordance~~transaction, the former members of ELFS were paid $13,000 in cash and were issued an aggregate amount of $6,000 in subordinated promissory notes. Refer to Note 7 to the Condensed Consolidated Financial Statements for ELFS subordinated promissory notes information.

The ELFS acquisition was funded with cash provided by normal operations, borrowings under the Amended Loan and Security Agreement (the “Santander Loan Agreement”) with Santander Bank, N.A. (“Santander”) dated September 21, 2021, as well as subordinated promissory notes issued to the former members of ELFS. This acquisition ~~method~~was completed to expand our product offerings in our Logistics segment. The preliminary fair value of ~~accounting, the Company allocated~~ the consideration ~~to the net tangible and identifiable intangible assets based on their estimated fair values, which were determined by an independent valuation performed by a third party,~~transferred of $21,437 was valued as of the ~~effective acquisition~~ date ~~March 1, 2016.~~

~~Goodwill represents the excess~~ of the ~~purchase price over~~acquisition as follows: cash - $13,000; earnout payments - $3,600; and subordinated promissory notes - $4,837 (preliminary net of working capital adjustment of $1,163). In March 2022, the fair value of the ~~underlying net tangible~~consideration transferred was adjusted to $21,700, and ~~identifiable intangible assets.~~

~~The following table summarizes the fair values assigned to the assets acquired and liabilities assumed.~~

Fair Value
Cash $ 377,653
Accounts receivable, net 620,632
Inventory 372,212
Prepaid expenses and other current assets 109,333
Fixed assets 155,050
Accounts payable and other liabilities (1,690,202 )
Note payable - related party (129,258 )
Customer relationships and other intangibles 7,700,000
Goodwill 4,402,838
Non-controlling interest (918,258 )
Purchase price $ 11,000,000

~~- 7 -~~

~~W.J. Byrnes & Co. (“Byrnes”)~~

~~General.~~On April 1, 2017, the Company executed and closed a Stock Purchase Agreement (the “Byrnes Purchase Agreement”) for the purchase by the Company of 100% of the outstanding common stock (the “Byrnes Shares”) of W.J. Byrnes & Co., a global logistics services provider with five U.S. locations.

Under the terms of the Byrnes Purchase Agreement, the purchase price for the Byrnes Shares was $100,000 in cash, paid at the closing, plus the assumption of Byrnes’ net liabilities, subject to certain closing adjustments and customary indemnifications, representations and warranties.

~~The Byrnes acquisition expands the domestic network of the Company’s Global Logistics Services segment.~~

~~Purchase Price Allocation~~. In accordance with the acquisition method of accounting, the Company allocated the consideration to the net tangible and identifiable intangible assets based on their estimated fair values, which were determined by an independent valuation performed by a third party, as of the effective acquisition date, April 1, 2017.

~~Goodwill represents the excess of the purchase price over~~ the fair value of the ~~underlying~~subordinated promissory notes was adjusted to $5,100, in each case due to a change in the net ~~tangible and identifiable intangible assets.~~

~~The~~working capital adjustment of $263.

The following table summarizes, on an unaudited pro forma basis, the ~~fair values assigned~~condensed combined results of operations of the Company for the three and nine months ended June 30, 2021 assuming the acquisition of ELFS was made on October 1, 2020. The pro forma unaudited condensed consolidated results give effect to, among other things, amortization of intangible assets and interest expense on acquisition-related debt.

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The pro forma results are not necessarily indicative of the ~~assets acquired~~operating results that would have occurred had the acquisitions been consummated as of the date indicated, nor are they necessarily indicative of future operating results.

(in thousands, except per share data)	Three Months ended June 30, 2021		Nine Months ended June 30, 2021
Revenue	$	54,207	$	146,098
Income from Operations	$	2,263	$	4,313
Net Income	$	1,046	$	2,658
Net Income Available to Common Stockholders	$	849	$	2,092
Net Income per share:
Basic	$	1.12	$	2.84
Diluted	$	1.06	$	2.71
Net Income per share attributable to Common Stockholders:
Basic	$	0.90	$	2.23
Diluted	$	0.86	$	2.13

The foregoing unaudited pro forma results are for informational purposes only and ~~liabilities assumed.~~

Fair Value
Cash $ 115,986
Accounts receivable, net of allowance for doubtful accounts 298,803
Customer relationships and other intangibles 240,000
Goodwill 658,381
Security deposits 15,275
Note payable - bank (224,998 )
Accounts payable - trade (891,169 )
Accrued expenses and other current liabilities (112,278 )
Purchase price $ 100,000

are not necessarily indicative of the actual results of operations that might have occurred had the acquisition occurred on October 1, 2020, nor are they necessarily indicative of future results.

~~- 8 -~~

INVENTORY

Inventories consisted of the following (in thousands):

	June 30, 2022			September 30, 2021
Finished goods	$	1,097		$	919
Work-in-process		777			968
Raw materials		2,329			1,365
Gross inventory		4,203			3,252
Less – reserve for inventory valuation		(70	)		(25	)
Inventory net	$	4,133		$	3,227

3.4.

INTANGIBLE ASSETS

A summary of intangible assets and the estimated useful lives used in the computation of amortization is as ~~follows:~~

June 30, September 30,
2017 2016 Life
Customer relationships $ 11,690,000 $ 11,450,000 15-20 years
Trademarks / names 1,770,000 1,770,000 20 years
Other 60,000 60,000 2-5 years
13,520,000 13,280,000
Less: accumulated amortization (1,478,229 ) (906,734 )
$ 12,041,771 $ 12,373,266

follows (in thousands):

	June 30, 2022			September 30, 2021			Life
Customer relationships	$	23,482		$	23,482		12-24 Years
Trademarks/names		4,490			4,490		1-20 Years
Trademarks/names		521			521		Indefinite
Other		1,149			1,149		2-22 Years
		29,642			29,642
Less: Accumulated Amortization		(6,953	)		(5,469	)
Intangible assets, net	$	22,689		$	24,173

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The composition of the intangible assets balance at June 30, 2022 and September 30, 2021 is as follows (in thousands):

	June 30, 2022			September 30, 2021
Logistics	$	18,174		$	18,174
Life Sciences		3,768			3,768
Manufacturing		7,700			7,700
		29,642			29,642
Less: Accumulated Amortization		(6,953	)		(5,469	)
Intangible assets, net	$	22,689		$	24,173

Amortization expense for the nine months ended June 30, 2022 and 2021 was $1,485 and $832, respectively.

5.	4.GOODWILL

The Company’s goodwill carrying amounts relate to the acquisitions in the Logistics, Life Sciences and Manufacturing businesses.

The composition of the goodwill balance at June 30, 2022 and September 30, 2021 was as follows (in thousands):

	June 30, 2022		September 30, 2021
Logistics	$	9,175	$	9,063
Life Sciences		4,377		4,377
Manufacturing		5,046		5,046
Total	$	18,598	$	18,486

6.	NOTES PAYABLE – BANKS

~~Presidential Financial Corporation Borrowing Facility~~

~~On March 27, 2014, Janel Corporation and several of its~~

(A)	Santander Bank Facility

The wholly-owned subsidiaries ~~within its Global~~which comprise the Company’s Logistics ~~Services~~ segment (collectively, the “Janel Group Borrowers”), ~~entered into~~with the Company as a guarantor, have a Loan and Security Agreement (the “Santander Loan Agreement”) with ~~Presidential Financial Corporation (“Presidential”)~~Santander with respect to a revolving line of credit facility (the ~~“Presidential~~“Santander Facility”). ~~As currently~~The Santander Loan Agreement was amended on March 31, 2022 to provide for, among other changes, certain updates: (i) the ~~Presidential Facility provides that the Janel Borrowers can borrow up~~maximum revolving facility amount available was increased from $30,000 to ~~$10,000,000, limited~~$31,500 (limited to 85% of the ~~Janel Borrowers’ aggregate outstanding~~borrowers’ eligible accounts receivable borrowing base and reserves, subject to ~~adjustment as~~adjustments set forth in the Santander Loan Agreement) ; (ii) the LIBOR basis on which interest under the Santander Loan Agreement was calculated under certain circumstances was changed to the Secured Overnight Financing Rate (“SOFR”); (iii) a one-time increase from $1,000 to $3,000 in the amount the Company was permitted to distribute to holders of the Company’s Series C Stock if specified conditions are met; and ~~Security Agreement.~~ (iv) the amount of indebtedness of the Company’s Antibodies Incorporated subsidiary which the Company was permitted to guaranty was increased from $2,920 to $5,000. The Santander Loan Agreement matures on September 21, 2026. Interest ~~will accrue~~accrues on the Santander Facility at an annual rate equal to ~~five percent above~~ the ~~greater of (a) the prime rate of interest quoted in The Wall Street Journal from time to time, or (b) 3.25%~~one-month SOFR plus 2.75%. The Janel Group Borrowers’ obligations under the ~~Presidential~~Santander Facility are secured by all of the assets of the Janel ~~Borrowers. The~~Group Borrowers, while the Santander Loan ~~Security~~ Agreement ~~requires, among other things, that~~contains customary terms and covenants. As a result of its terms, the ~~Company,~~Santander Facility is classified as a current liability on ~~a monthly basis, maintain a “minimum fixed charge covenant ratio” and “tangible net worth,” both as defined. The Presidential~~the consolidated balance sheet.

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At June 30, 2022, outstanding borrowings under the Santander Facility ~~will expire on March 27, 2018,~~were $22,920, representing 89.0% of the $31,500 available subject to ~~earlier termination as provided in the Loan~~limitations thereunder, and ~~Security Agreement, unless renewed.~~

Asinterest was accruing at an effective interest rate of ~~June~~3.16%.

At September 30, ~~2017, there were~~2021, outstanding borrowings ~~of $6,442,500~~ under the ~~Presidential~~Santander Facility were $29,637, representing ~~90.7%~~98.8% of the ~~$7,104,942~~$30,000 available ~~thereunder.~~subject to limitations thereunder, and interest was accruing at an effective interest rate of 3.00%.

The ~~Janel Borrowers are~~Company was in compliance with the covenants defined in the Santander Loan Agreement at both June 30, 2022 and ~~Security Agreement.~~

~~First Merchants Bank Borrowing Facility~~

~~On March 21, 2016, INDCO executed~~September 30, 2021.

(B)	First Merchants Bank Credit Facility

Indco has a Credit Agreement (the “First Merchants Credit Agreement”) with First Merchants Bank ~~(“First Merchants”)~~ with respect to a ~~$6,000,000~~$5,500 term loan, ~~and $1,500,000~~a $1,000 (limited to the borrowing base and reserves) revolving loan~~(together,~~ and a $680 mortgage loan (together, the “First ~~Merchants~~Merchant Facility”). Interest ~~will accrue~~accrues on the term loan at an annual rate equal to the one-month LIBOR plus either ~~3.75%~~2.75% (if ~~INDCO’s cash flow leverage~~Indco’s total funded debt to EBITDA ratio is less than ~~or equal to~~ 2:1) or ~~4.75%~~3.5% (if ~~INDCO’s cash flow leverage~~Indco’s total funded debt to EBITDA ratio is greater than or equal to 2:1). Interest accrues on the revolving loan at an annual rate equal to the one-month LIBOR plus 2.75%. ~~INDCO’s~~Interest accrues on the mortgage loan at an annual rate of 4.19%. Indco’s obligations under theFirst Merchants Facilityare secured by all of ~~INDCO’s~~Indco’s real property and other assets, and are guaranteed by the Company. Additionally, the Company’s guarantee of Indco’s obligations is secured by a pledge of the Company’s Indco shares.

The ~~Credit Agreement requires, among other things, that INDCO, on a monthly basis, not exceed a “maximum total funded debt to EBITDA ratio”~~term loan and ~~maintain a “minimum fixed charge covenant ratio,” both as defined. The~~revolving loan portions of the First Merchants Facility~~requires monthly payments until~~ will expire on August 30, 2024, and the ~~expiration date~~mortgage loan will mature on ~~the fifth anniversary of the loan. The loan is subject~~July 1, 2025 (subject to earlier termination as provided in the First Merchants Credit ~~Agreement,~~Agreement), unless ~~renewed.~~

renewed or extended.

As of June 30, ~~2017,~~2022, there were no0 outstanding borrowings under the revolving loan, ~~and there were outstanding~~$2,131 of borrowings ~~of $4,533,994~~ under the term ~~loan. INDCO is~~loan, and $637 of borrowings under the mortgage loan with interest accruing on the term loan and mortgage loan at an effective interest rate of 3.87% and 4.19%, respectively.

As of September 30, 2021, there were 0 outstanding borrowings under the revolving loan, $2,713 of borrowings under the term loan, and $655 of borrowings under the mortgage loan with interest accruing on the term loan and mortgage loan at an effective interest rate of 2.83% and 4.19%, respectively.

Indco was in compliance with the covenants defined in the First Merchants Credit ~~Agreement.~~

Agreement at both June 30, 2022 and September 30, 2021.

(in thousands)	June 30, 2022			September 30, 2021
Total Debt*	$	2,768		$	3,368
Less Current Portion		(809	)		(809	)
Long Term Portion	$	1,959		$	2,559

*	5. Note: Payment under the First Merchants Credit Agreement term loan is due in monthly installments of $65 plus monthly interest, at LIBOR plus 2.75% to 3.5% per annum, and payment under the First Merchants Credit Agreement mortgage loan is due in monthly installments of $4.

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(C)	~~LONG-TERM DEBT –~~First Northern Bank of Dixon

Antibodies Incorporated (“Antibodies”), a wholly-owned subsidiary of the Company, has a loan agreement (the “First Northern Loan Agreement”) with First Northern Bank of Dixon (“First Northern”), with respect to a $2,235 term loan (the “First Northern Term Loan”) which bears interest at an annual rate of Prime plus 325 basis points (currently 4.18%) and matures on November 14, 2029.

In addition, Antibodies has a $750 revolving credit facility with First Northern which currently bears interest at the annual rate of Prime plus 325 basis points (currently 4.18%) and matures on November 5, 2022 (the “First Northern Revolving Loan”) and is collateralized by real property owned by Antibodies and guaranteed by the Company. There were 0 outstanding borrowings on the revolving credit facility as of June 30, 2022 or September 30, 2021.

Antibodies also has 2 separate business loan agreements with First Northern: a $125 term loan in connection with the expansion of solar generation capacity on the Antibodies property (“First Northern Solar Loan”) bearing interest at the annual rate of 4.43% (subject to adjustment in five years) and maturing on November 14, 2029; and a $60 term loan in connection with the expansion of generator capacity on the Antibodies property (“Generator Loan”) bearing interest at the annual rate of 4.25% and maturing on November 5, 2025. There were 0 outstanding borrowings under the Generator Loan as of June 30, 2022 or September 30, 2021.

As of June 30, 2022, the total amount outstanding under the First Northern Term Loan was $2,098, of which $2,041 is included in long-term debt and $57 is included in current portion of long-term debt, with interest accruing at an effective interest rate of 4.18%.

As of September 30, 2021, the total amount outstanding under the First Northern Term Loan was $2,139, of which $2,084 is included in long-term debt and $55 is included in current portion of long-term debt, with interest accruing at an effective interest rate of 4.18%.

As of June 30, 2022, the total amount outstanding under the First Northern Solar Loan was $25, of which $17 is included in long-term debt, and $8 is included in current portion of long-term debt, with interest accruing at an effective interest rate of 4.43%.

As of September 30, 2021, the total amount outstanding under the First Northern Solar Loan was $105, of which $101 is included in long-term debt and $4 is included in current portion of long-term debt, with interest accruing at an effective interest rate of 4.43%.

The Company was in compliance with the covenants defined in the First Northern Loan Agreement at June 30, 2022 and September 30, 2021.

(in thousands)	June 30, 2022			September 30, 2021
Total Debt*	$	2,123		$	2,244
Less Current Portion		(65	)		(59	)
Long Term Portion	$	2,058		$	2,185

*	Long-term debt under the First Northern Loan Agreement is due in monthly installments of $12 plus monthly interest, at 4.18% per annum for five years.

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7.	SUBORDINATED PROMISSORY NOTES - RELATED PARTY

~~Long-term debt - related party consists~~

Aves Labs, Inc., a wholly-owned subsidiary of the ~~following:~~

June 30, September 30,
2017 2016
Non-interest bearing note payable to a related party, net of imputed interest due $ 492,635 $ 971,108
Less current portion (492,635 ) (500,000 )
$ - $ 471,108

Company, is the obligor on a fixed 0.5% subordinated promissory note in the amount of $1,850 (the “ICT Subordinated Promissory Note”) issued to the former owner of ImmunoChemistry Technologies, LLC (“ICT”), in connection with a business combination whereby the Company acquired all of the membership interests of ICT. The ICT Subordinated Promissory Note is payable in 16 scheduled quarterly installments of principal and interest beginning March 4, 2021, matures on December 4, 2024, and may be prepaid, in whole or in part, without premium or penalty.

The ICT Subordinated Promissory Note is guaranteed by the Company and is secured by the Company’s membership interests in ICT. The ICT Subordinated Promissory Note is subordinate to and junior in right of payment for principal interest premiums and other amounts payable to the Santander Bank Facility, First Merchants Facility and the First Northern Bank of Dixon.

As of June 30, 2022, the amount outstanding under the ICT Subordinated Promissory Note was $825, of which $450 is included in the current portion of subordinated promissory notes and $375 is included in the long-term portion of subordinated promissory notes.

As of September 30, 2021, the amount outstanding under the ICT Subordinated Promissory Note was $1,237, of which $550 is included in the current portion of subordinated promissory notes and $687 is included in the long-term portion of subordinated promissory notes.

Janel Group, Inc. (“Janel Group”), a wholly-owned subsidiary of the Company, is the obligor on 4 fixed 4% subordinated promissory notes totaling $6,000 in the aggregate (together, the “ELFS Subordinated Promissory Notes”), payable to certain former shareholders of ELFS. All of the ELFS Subordinated Promissory Notes are guaranteed by the Company and are subordinate to and junior in right of payment for principal, interest, premiums and other amounts payable to the Santander Bank Facility and the First Merchants Facility. The ELFS Subordinated Promissory Notes are payable in 12 equal consecutive quarterly installments of principal together with accrued interest. Beginning October 15, 2021 and on the same day of the next 8 consecutive calendar quarters, thereafter payment of accrued interest and unpaid interest is due to the former shareholders. Beginning October 15, 2023 and on the same day of the next 12 consecutive calendar quarters, thereafter payment of principal together with accrued interest and unpaid interest is due to the former shareholders. As of June 30, 2022, the principal amount of the ELFS Subordinated Promissory Notes was adjusted to $5,100 due to a revised working capital adjustment of $900.

As of June 30, 2022 and September 30, 2021, the amount outstanding under the ELFS Subordinated Promissory Notes was $5,100 and $4,838, respectively, and was included in the long-term portion of subordinated promissory notes.

(in thousands)	June 30, 2022			September 30, 2021
Total subordinated promissory notes	$	5,925		$	6,075
Less current portion of subordinated promissory notes		(450	)		(550	)
Long term portion of subordinated promissory notes	$	5,475		$	5,525

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~~- 9 -~~

6.8.

STOCKHOLDERS’ EQUITY

~~On October 1, 2016,~~

(A)	Preferred Stock

Series B Convertible Preferred Stock

Shares of the ~~Company entered~~Company’s Series B Convertible Preferred Stock (the “Series B Stock”) are convertible into an agreement to grant a consultant options to purchase 6,053 shares of common stock ($25,000 worth of stock based on the September 30, 2016 closing price of $4.13) at an exercise price of $4.13 per share. The options are exercisable in three installments on each of October 1, 2017, 2018 and 2019.

~~On March 31, 2017, the Company acquired 20,000 shares of its common stock for an aggregate of $240,000. This amount was paid in April 2017.~~

~~On May 12, 2017, the two executive officers were granted an aggregate of 11,121 options to purchase~~ shares of the Company’s $0.001 par value common stock ~~under~~(“Common Stock”) at any time on a one-share (of Series B Stock) for 10-shares (of Common Stock) basis. On March 31, 2022, the Company, on behalf of 2 holders, converted the remaining 30.6 shares of Series B Stock into 306 shares of the Company’s Common Stock. On March 31, 2022, the Company submitted for filing to the Nevada Secretary of State a Certificate, Amendment or Withdrawal of Designation withdrawing the Company’s Series B Convertible Preferred Stock from the Company’s Articles of Incorporation. As of June 30, 2022, the Company had 0 shares of Series B Stock outstanding.

Series C Cumulative Preferred Stock

Shares of the Company’s Series C Cumulative Preferred Stock (the “Series C Stock”) were initially entitled to receive annual dividends at a rate of 7% per annum of the original issuance price of $500, when and if declared by the Company’s Board of Directors, with such rate to increase by 2% annually beginning on the third anniversary of issuance of such Series C Stock to a maximum rate of 13%. By the filing of the Certificate of Amendment to the Company’s Certificate of Incorporation on March 31, 2022, the annual dividend rate decreased to 5% per annum of the original issuance price, when and if declared by the Company’s Board of Directors, and will increase by 1% beginning on January 1, 2024. Such rate is to increase on each January 1 thereafter for four years to a maximum rate of 9%. The dividend rate of the Series C Stock as of June 30, 2022 was 5%.

On March 31, 2022, the Company purchased 4,687 shares of the Series C Stock from 2 holders at a purchase price of $500 per share plus accrued dividends, or an aggregate of $3,000, and exchanged 4,905 shares of Series C Stock plus accrued dividends from 1 holder, for the issuance of 65,205 shares of the Company’s Common Stock, par value $0.001 per share valued at $47.00 per share of Common Stock (the closing price for the Common Stock on March 30, 2022), or a total value of $3,065. As a result of these transactions, the number of issued and outstanding shares of Series C Stock was reduced from 20,960 shares to 11,368 shares.

9.	STOCK-BASED COMPENSATION

On October 30, 2013, the Board of Directors of the Company adopted the Company’s 2013 Non-Qualified Stock Option ~~Plan. The options are exercisable~~Plan (the “2013 Option Plan”) providing for a period of ten years at an exercise price of $8.01 per share. Eight-thousand options were immediately exercisable, and 3,121 options are exercisable in three equal annual installments commencing on the first anniversary of the grant date.

~~On May 12, 2017, two employees were granted an aggregate of 10,000~~ options to purchase up to 100,000 shares of ~~the Company’s~~ common stock ~~under the Company’s 2013 Non-Qualified Stock Option Plan. The options are exercisable~~ for ~~a period of ten years at an exercise price of $8.01 per share. The shares are exercisable in three equal annual installments commencing on the first anniversary of the grant date.~~

On May 12, 2017, the Company adopted the Company’s 2017 Equity Incentive Plan (the “Plan”) pursuant to which (i) incentive stock options, (ii) non-statutory stock options, (iii) restricted stock awards, and (iv) stock appreciation rights with respect to shares of the Company’s common stock may be grantedissuance to directors, officers, employees of and consultants to the ~~Company. Participants~~Company and ~~all terms~~its subsidiaries.

On September 21, 2021, the Board of ~~any~~Directors of the Company adopted the Amended and Restated 2017 Janel Corporation Equity Incentive Plan (the “Amended Plan”) pursuant to which non-statutory stock options, restricted stock awards ~~under the Plan are at the discretion~~and stock appreciation rights of the Company’s ~~Board~~Common Stock may be granted to employees, directors and consultants to the Company and its subsidiaries. The Amended Plan increased the number of ~~Directors~~shares of Common Stock that may be issued pursuant to the Amended Plan from 100,000 to 200,000 shares of Common Stock of the Company and was updated to reflect certain other non-substantive amendments.

Total stock-based compensation for the nine months ended June 30, 2022 and 2021 amounted to $800 and $85, respectively, and is included in ~~its role~~selling, general and administrative expense in the Company’s statements of operations.

(A)	Stock Options

The Company uses the Black-Scholes option pricing model to estimate the fair value of our share-based awards. In applying this model, we use the following assumptions:

Risk-free interest rate - We determine the risk-free interest rate by using a weighted average assumption equivalent to the expected term based on the U.S. Treasury constant maturity rate.

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Expected term - We estimate the expected term of our options on the average of the vesting date and term of the option.

Expected volatility - We estimate expected volatility using daily historical trading data of a peer group.

•	Dividend yield - We have never paid dividends on our common stock and currently have no plans to do so; therefore, no dividend yield is applied.

The fair values of our employee option awards were estimated using the assumptions below, which yielded the following weighted average grant date fair values for the periods presented:

		Nine Months Ended June 30, 2022
Risk-free interest rate		1.10%
Expected option term in years		5.5-6.5
Expected volatility		100.3% - 110.3%
Dividend yield		0%
Weighted average grant date fair value		$5.57 - $6.66

Options for Employees

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding balance at September 30, 2021		98,994		$	5.93		4.5	$	1,689.38
Granted		10,000		$	23.00		9.3	$	0
Exercised		(35,000	)	$	4.60		—	$	—
Outstanding balance at June 30, 2022		73,994		$	8.87		5.1	$	2,303.14
Exercisable at June 30, 2022		56,498		$	6.36		4.0	$	1,900.74

The aggregate intrinsic value in the above table was calculated as the ~~Compensation Committee.~~

~~On May 12, 2017, a non-executive director was granted an aggregate of 6,524 options to purchase shares~~difference between the closing price of the Company’s common stock ~~under~~at June 30, 2022 of $40 per share and the ~~Plan.~~ exercise price of the stock options that had strike prices below such closing price.

As of June 30, 2022, there was approximately $155 of total unrecognized compensation expense related to the unvested employee stock options which is expected to be recognized over a weighted average period of less than one year.

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Liability classified share-based awards

During the nine months ended June 30, 2022, 7,018 options were granted and 10,372 options were exercised with respect to Indco’s common stock. The Company uses the Black-Scholes option pricing model to estimate the fair value of Indco’s share-based awards. In applying this model, the Company used the following assumptions:

	Nine Months Ended June 30, 2022
Risk-free interest rate		1.10%
Expected option term in years		5.5-6.5
Expected volatility		39%
Dividend yield		0%
Weighted average grant date fair value		$17.16

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding balance at September 30, 2021		38,961		$	10.28		6.62	$	78.16
Granted		7,018		$	17.16		9.25	$	0
Exercised		(10,372	)	$	8.30		—	$	—
Outstanding balance at June 30, 2022		35,607		$	12.22		7.02	$	175.98
Exercisable at June 30, 2022		21,663		$	10.72		6.00	$	139.47

The aggregate intrinsic value in the above table was calculated as the difference between the valuation price of Indco’s common stock at June 30, 2022 of $17.16 per share and the exercise price of the stock options that had strike prices below such closing price.

The liability classified awards were measured at fair value at each reporting date until the final measurement date, which was the date of completion of services required to earn the option. The accrued compensation cost related to these options was approximately $300 and $361 as of June 30, 2022 and September 30, 2021, respectively, and is included in other liabilities in the condensed consolidated financial statements. The compensation cost related to these options was approximately $31 and $50 for the nine months ended June 30, 2022 and 2021, respectively.

The cost associated with the options issued on each grant date is being recognized ratably over the period of service required to earn each tranche of options.

Upon vesting, the options continue to be accounted for as a liability in accordance with ASC 480-10-25-8 and are measured in accordance with ASC 480-10-35 at every reporting period until the options are ~~exercisable for a period~~settled.

On December 13, 2021, 2 minority owners of ~~ten years~~Indco exercised 7,000 and 3,372 options to purchase Indco’s common stock at an exercise price of ~~$8.01~~$6.48 and $12.07 for an aggregate purchase price of $45 and $41, respectively. Indco issued related party promissory notes in the amount of $45 and $41, respectively, which bear interest at 1% per ~~share.~~annum; both interest and principal are payable on the maturity date of December 31, 2024. These notes are included in security deposits and other long-term assets. The fair value of the 7,000 and 3,372 shares ~~are exercisable~~of Indco’s common stock was recorded as an increase in ~~three equal annual installments commencing on October 1, 2017~~mandatorily redeemable non-controlling interest. On December 13, 2021, Indco repurchased 7,000 shares of Indco’s stock at a purchase price of $17.16 per share from a minority owner of Indco for the aggregate purchase price of $120. The fair value of the repurchased 7,000 shares of Indco’s common stock was recorded as a decrease in mandatorily redeemable non-controlling interest. As a result of the exercise of 10,372 options and the ~~subsequent anniversaries thereafter.~~

~~On May 12, 2017,~~repurchase of 7,000 shares of Indco’s stock, the mandatorily redeemable non-controlling interest percentage was 9.77% as of June 30, 2022.

Changes in the fair value of the vested options are recognized in earnings in the condensed consolidated financial statements.

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The options are classified as liabilities, and the underlying shares of Indco’s common stock also contain put options which result in their classification as a mandatorily redeemable security. While their redemption does not occur on a fixed date, there is an unconditional obligation for the Company ~~granted 15,000 and 10,000 Restricted Stock Awards~~ to ~~a non-executive director and a consultant, respectively, under~~repurchase the ~~Plan. Each grant vests~~shares upon death, which is certain to occur at some point in ~~three equal annual installments commencing on October 1, 2017.~~

~~BUSINESS SEGMENT INFORMATION~~

time.

As of June 30, ~~2017,~~2022, there was approximately $49 of total unrecognized compensation expense related to the unvested Indco stock options. This expense is expected to be recognized over a weighted average period of less than one year.

(B)	Restricted Stock

On March 30, 2022, the Board of Directors of the Company ~~operates~~approved an equity grant of 15,000 shares of Common Stock as a Restricted Stock Award to an employee of the Company pursuant to the Company’s Amended Plan, vesting immediately. The compensation cost related to this award was approximately $705 for the nine-month period ended June 30, 2022 and was included in ~~two reportable segments, Global Logistics Services~~selling, general and ~~Manufacturing, supported by a corporate group which conducts activities that are non-segment specific.~~ administrative expense in the Company’s statements of operations.

10.	INCOME PER COMMON SHARE

The following table ~~presents selected financial information about~~provides a reconciliation of the ~~Company’s reportable segments~~basic and diluted earnings per share (“EPS”) computations for the three and nine months ended June 30, ~~2017~~2022 and ~~2016:~~

For the three months ended June 30, 2017 Consolidated Global Logistics Services Manufacturing Corporate
Revenues $ 20,246,878 $ 17,963,837 $ 2,283,041 $ -
Forwarding expenses and cost of revenues 15,445,239 14,455,926 989,313 -
Gross margin 4,801,639 3,507,911 1,293,728 -
Selling, general and administrative 4,002,311 2,870,235 635,680 496,396
Amortization of intangible assets 195,666 - 2,500 193,166
Income (loss) from operations 603,662 637,676 655,548 (689,562 )
Interest expense 184,280 116,672 67,608 -
Identifiable assets 38,051,647 13,976,503 2,343,533 21,731,611
Capital expenditures 5,510 - 5,510 -

2021:

	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
(in thousands, except per share data)	2022			2021			2022			2021
Income:
Net income	$	2,158		$	870		$	5,119		$	1,721
Preferred stock dividends		(71	)		(197	)		(515	)		(566	)
Non-controlling interest dividends		0			0			(61	)		0
Net Income available to common stockholders	$	2,087		$	673		$	4,543		$	1,155

Common Shares:
Basic - weighted average common shares		1,057.7			939.6			996.9			937.2
Effect of dilutive securities:
Stock options		58.9			54.9			58.0			44.3
Convertible preferred stock		0			0.3			0.1			0.3
Diluted - weighted average common stock		1,116.6			994.8			1,055.0			981.8

Income per Common Share:
Basic -
Net income	$	2.04		$	0.93		$	5.13		$	1.84
Preferred stock dividends		(0.07	)		(0.20	)		(0.51	)		(0.60	)
Non-controlling interest dividends		0			0			(0.06	)		0
Net Income available to common stockholders	$	1.97		$	0.73		$	4.56		$	1.24

Diluted -
Net income	$	1.93		$	0.88		$	4.85		$	1.75
Preferred stock dividends		(0.06	)		(0.20	)		(0.48	)		(0.58	)
Non-controlling interest dividends		0			0			(0.06	)		0
Net income available to common stockholders	$	1.87		$	0.68		$	4.31		$	1.17

The computation for the diluted number of shares excludes unexercised stock options that are anti-dilutive. There were 0 anti-dilutive shares for the nine-month period ended June 30, 2022 and 44,386 anti-dilutive shares for the nine-month period ended June 30, 2021.

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11.	INCOME TAXES

The reconciliation of income tax computed at the Federal statutory rate to the provision for income taxes from continuing operations for the three and nine-month periods ended June 30, 2022 and 2021 is as follows (in thousands):

	For the Three Months Ended June 30, 2022			For the Three Months Ended June 30, 2021			For the Nine Months Ended June 30, 2022			For the Nine Months Ended June 30, 2021
Federal taxes at statutory rates	$	(604	)	$	(247	)	$	(1,494	)	$	(497	)
Permanent differences		0			13			0			20
State and local taxes, net of Federal benefit		(110	)		(77	)		(500	)		(171	)
Total	$	(714	)	$	(311	)	$	(1,994	)	$	(648	)

12.	BUSINESS SEGMENT INFORMATION

As referenced above in Note 1, the Company operates in 3 reportable segments: Logistics (previously known as Global Logistics Services), Life Sciences and Manufacturing.

The Company’s Chief Executive Officer regularly reviews financial information at the reporting segment level in order to make decisions about resources to be allocated to the segments and to assess their performance.

The following tables present selected financial information about the Company’s reportable segments and Corporate for the purpose of reconciling to the consolidated totals for the three and nine months ended June 30, 2022:

For the three months ended June 30, 2022 (in thousands)	Consolidated		Logistics		Life Sciences		Manufacturing		Corporate
Revenue	$	78,984	$	73,684	$	2,738	$	2,562	$	0
Forwarding expenses and cost of revenues		61,819		59,889		648		1,282		0
Gross profit		17,165		13,795		2,090		1,280		0
Selling, general and administrative		13,505		10,387		1,225		676		1,217
Amortization of intangible assets		489		0		0		0		489
Income (loss) from operations		3,171		3,408		865		604		(1,706	)
Interest expense		299		242		31		26		0
Identifiable assets		126,106		67,196		12,137		4,363		42,410
Capital expenditures	$	207	$	171	$	13	$	23	$	0

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For the nine months ended June 30, 2022 (in thousands)	Consolidated		Logistics		Life Sciences		Manufacturing		Corporate
Revenue	$	243,149	$	226,313	$	9,257	$	7,579	$	0
Forwarding expenses and cost of revenues		193,986		187,780		2,516		3,690		0
Gross profit		49,163		38,533		6,741		3,889		0
Selling, general and administrative		39,718		29,802		3,758		2,170		3,988
Amortization of intangible assets		1,485		0		0		0		1,485
Income (loss) from operations		7,960		8,731		2,983		1,719		(5,473	)
Interest expense		847		683		88		76		0
Identifiable assets		126,106		67,196		12,137		4,363		42,410
Capital expenditures	$	477	$	260	$	171	$	46	$	0

For the three months ended June 30, 2021 (in thousands)	Consolidated		Logistics		Life Sciences		Manufacturing		Corporate
Revenue	$	34,826	$	29,369	$	3,384	$	2,073	$	0
Forwarding expenses and cost of revenues		26,058		24,173		941		944		0
Gross profit		8,768		5,196		2,443		1,129		0
Selling, general and administrative		7,158		4,523		1,084		682		869
Amortization of intangible assets		288		0		0		0		288
Income (loss) from operations		1,322		673		1,359		447		(1,157	)
Interest expense		141		62		34		39		6
Identifiable assets		72,494		26,903		10,366		3,644		31,581
Capital expenditures	$	47	$	33	$	14	$	0	$	0

For the nine months ended June 30, 2021 (in thousands)	Consolidated		Logistics		Life Sciences		Manufacturing		Corporate
Revenue	$	91,446	$	76,002	$	8,973	$	6,471	$	0
Forwarding expenses and cost of revenues		68,680		62,818		2,877		2,985		0
Gross profit		22,766		13,184		6,096		3,486		0
Selling, general and administrative		19,282		11,640		3,273		2,007		2,362
Amortization of intangible assets		832		0		0		0		832
Income (loss) from operations		2,652		1,544		2,823		1,479		(3,194	)
Interest expense		418		180		89		129		20
Identifiable assets		72,494		26,903		10,366		3,644		31,581
Capital expenditures	$	218	$	76	$	127	$	15	$	0

13.

~~- 10 -~~

FAIR VALUE MEASUREMENTS

For the three months ended June 30, 2016 Consolidated Global Logistics Services Manufacturing Corporate
Revenues $ 17,505,453 $ 15,425,092 $ 2,080,361 $ -
Forwarding expenses and cost of revenues 13,118,726 12,157,139 961,587 -
Gross margin 4,386,727 3,267,953 1,118,774 -
Selling, general and administrative 3,460,936 2,613,697 594,186 253,053
Amortization of intangible assets 203,237 - 2,500 200,737
Income (loss) from operations 722,554 654,256 522,088 (453,790 )
Interest expense 199,892 120,988 78,904 -
Identifiable assets 33,761,934 12,338,707 1,744,624 19,678,603
Capital expenditures 19,797 - 19,797 -

For the nine months ended June 30, 2017 Consolidated Global Logistics Services Manufacturing Corporate
Revenues $ 55,943,398 $ 49,499,193 $ 6,444,205 $ -
Forwarding expenses and cost of revenues 42,698,641 39,810,183 2,888,458 -
Gross margin 13,244,757 9,689,010 3,555,747 -
Selling, general and administrative 11,206,459 8,001,437 1,911,848 1,293,174
Amortization of intangible assets 578,997 - 7,500 571,497
Income (loss) from operations 1,459,301 1,687,573 1,636,399 (1,864,671 )
Interest expense 566,807 356,362 210,445 -
Identifiable assets 38,051,647 13,976,503 2,343,533 21,731,611
Capital expenditures 136,118 22,793 113,325 -

For the nine months ended June 30, 2016 Consolidated Global Logistics Services Manufacturing Corporate
Revenues $ 56,728,456 $ 53,935,789 $ 2,792,667 $ -
Forwarding expense and cost of revenues 45,438,636 44,171,758 1,266,878 -
Gross margin 11,289,820 9,764,031 1,525,789 -
Selling, general and administrative 9,798,908 8,086,749 805,985 906,174
Amortization of intangible assets 402,915 - 3,333 399,582
Income (loss) from operations 1,087,997 1,677,282 716,471 (1,305,756 )
Interest expense 476,665 382,804 93,861 -
Identifiable assets 33,761,934 12,338,707 1,744,624 19,678,603
Capital expenditures 307,550 2,905 304,645 -

Recurring Fair Value Measurements

The following table presents the Company’s liabilities that are measured at fair value on a recurring basis based on the three-level valuation hierarchy (in thousands):

Level 3	June 30, 2022		September 30, 2021
Contingent earnout liabilities	$	3,600	$	3,600
Level 3 Liabilities	$	3,600	$	3,600

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This liability relates to the estimated fair value of earnout payments to former ELFS owners for the earnout period ending June 30, 2022 and September 30, 2021. The current and non-current portions of the fair value of the contingent earnout liability at June 30, 2022 and September 30, 2021 were $1,054 and $2,546, respectively.

Refer to Note 2 to the Condensed Consolidated Financial Statements for information regarding the ELFS acquisition. The following table sets forth a summary of the changes in the fair value of the Company’s contingent earnout liabilities, which are measured at fair value on a recurring basis utilizing Level 3 assumptions in their valuation (in thousands):

	June 30, 2022		September 30, 2021
Balance beginning of period	$	3,600	$	0
Fair value of contingent consideration recorded in connection with business combinations		0		3,600
Change in fair value of contingent consideration		0		0
Balance end of period	$	3,600	$	3,600

14.

8.LEASES

The Company has operating leases for office and warehouse space in all locations where it conducts business. As of June 30, 2022, the remaining terms of the Company’s operating leases were between one and 76 months, and certain lease agreements contain provisions for future rent increases. Payments due under the lease contracts include the minimum lease payments that the Company is obligated to make under the non-cancelable initial terms of the leases as the renewal terms are at the Company’s option and the Company is not reasonably certain to exercise those renewal options at lease commencement.

The components of lease cost for the three- and nine-month periods ended June 30, 2022 and 2021 are as follows (in thousands):

	Three Months Ended June 30, 2022		Three Months Ended June 30, 2021		Nine Months Ended June 30, 2022		Nine Months Ended June 30, 2021
Operating lease cost	$	457	$	235	$	1,370	$	721
Short-term lease cost		123		2		371		14
Total lease cost	$	580	$	237	$	1,741	$	735

Operating lease right of use assets, current portion of operating lease liabilities and long-term operating lease liabilities reported in the condensed consolidated balance sheets for operating leases as of June 30, 2022 were $5,505, $1,623 and $4,047, respectively. Operating lease right of use assets, current portion of operating lease liabilities and long-term operating lease liabilities reported in the condensed consolidated balance sheets for operating leases as of September 30, 2021 were $2,936, $1,281 and $1,751, respectively.

During the nine months ended June 30, 2022, the Company, through its wholly owned subsidiary ELFS, entered into new operating leases and recorded an additional $3,842 in operating lease right of use assets and corresponding lease liabilities.

As of June 30, 2022 and September 30, 2021, the weighted-average remaining lease term and the weighted-average discount rate related to the Company’s operating leases were 5.0 years and 3.13% and 2.9 years and 3.89%, respectively.

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Future minimum lease payments under non-cancelable operating leases as of June 30, 2022 are as follows (in thousands):

2023	$	1,620
2024		1,293
2025		1,032
2026		671
2027		626
Thereafter		853
Total undiscounted loan payments		6,095
Less: Imputed interest		(425	)
Total lease obligation	$	5,670

15.	SUBSEQUENT EVENTS

On July 1, 2022, the Company and Rubicon Technology, Inc. (“Rubicon”) entered into a Stock Purchase and Sale Agreement (the “Rubicon Purchase Agreement”) pursuant to which the Company commenced, on July 13, 2022, a cash tender offer (the “Offer”) to purchase up to 45.0% of the 2,446,652 issued and outstanding shares of Rubicon’s common stock, par value $0.001 (collectively, the “Rubicon Shares”), on a fully-diluted basis, at a price per Rubicon Share of $20.00, subject to the terms and conditions set forth in the Rubicon Purchase Agreement (the “Rubicon Transaction”). The Rubicon Purchase Agreement calls for the Offer to have an initial expiration date of 20 business days following the commencement date of the Offer, which expiration date may be extended by the Company ~~has evaluated events occurring after~~without the consent of Rubicon. The current expiration date of the Offer is August 12, 2022 at midnight, New York City time.

Under the terms of the Rubicon Purchase Agreement, the Company’s obligation to accept for payment and pay for any Rubicon Shares tendered in the Offer and not validly withdrawn is subject to certain conditions set forth in the Rubicon Purchase Agreement, including (i) there being validly tendered and not withdrawn prior to the expiration date that number of Rubicon Shares which represents at least 35.0% of the Rubicon Shares issued and outstanding on a fully diluted basis (the “Minimum Condition”), (ii) the absence of a Company Material Adverse Effect (as defined in the Rubicon Purchase Agreement), (iii) that the purchase of the Rubicon Shares pursuant to the Offer would not result, and not be reasonably likely to result, in a reduction or impairment of the net operating losses of Rubicon under the provisions of Section 382 of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder, and (iv) other conditions set forth in the Rubicon Purchase Agreement.

On July 11, 2022, Janel Group and its wholly-owned subsidiaries, as Borrowers, and the Company and Expedited Logistics and Freight Services, LLC, an Oklahoma limited liability company, as loan party obligors, entered into a Consent, Waiver and Second Amendment (the “Amendment”) with Santander with respect to the Santander Loan Agreement in order to, among other changes, (i) increase the maximum amount that the borrowers can borrow under the Santander Loan Agreement’s revolving credit facility from $31.5 million to $35 million and (ii) provide for a new bridge term loan to the Company in the principal amount of up to $12 million (the “Bridge Facility”) to be funded in connection with the Rubicon Transaction, subject to the satisfaction of certain customary limited conditions. The Bridge Facility must be drawn on or before September 15, 2022 and matures on the earlier to occur of (i) twenty (20) business days following the funding of the Bridge Facility and (ii) the date of ~~these financial statements through~~funding of the ~~date that these financial statements were issued. There is no material subsequent events as~~dividend to be paid by Rubicon in connection with the Rubicon Transaction.

The Amendment also contains a one-time waiver and consent to (a) the consummation of ~~that date which would require disclosure in or adjustments~~the Rubicon Transaction, and (b) a dividend of $2,500,000 to be paid by Janel Group to the ~~financial statements.~~

~~- 11 -~~

Company. If the Rubicon Transaction is not consummated on or before September 15, 2022, the waiver and consent will be automatically rescinded.

On August 1, 2022, Indco and First Merchants Bank entered into Amendment No. 3 to the First Merchants Credit Agreement, modifying the terms of Indco’s credit facilities.

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Under the revised terms, the credit facilities consist of a $5,500 term loan, a $1,000 (limited to the borrowing base and reserves) revolving loan and the continuation of a mortgage loan in the original principal amount of $680. Interest will accrue on the term loan at an annual rate equal to one-month adjusted term SOFR plus either 2.75% (if Indco’s total funded debt to EBITDA ratio is less than 2:1), or 3.5% (if Indco’s total funded debt to EBITDA ratio is greater than or equal to 2:1). Interest will accrue on the revolving loan at an annual rate equal to one-month adjusted term SOFR plus 2.75%. Interest will accrue on the mortgage loan at an annual rate of 4.19%. Indco’s obligations under the First Merchants Credit Facilities are secured by all of Indco’s real property and other assets, and are guaranteed by Janel, and Janel’s guarantee of Indco’s obligations is secured by a pledge of Janel’s Indco shares. The term loan and revolving loan portions of the First Merchants Credit Facilities will expire on July 31, 2027, and the mortgage loan will mature on July 1, 2025 (subject to earlier termination as provided in the Credit Agreement), unless renewed or extended.

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes thereto as of and for the three months and nine months ended June 30, 2022, which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Amounts presented in this section are in thousands, except share and per share data.

As used throughout this Report, “we,” “us”, “our,” “Janel,” “the Company,” “Registrant” and similar words refer to Janel Corporation and ~~subsidiaries.~~

its Subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the “Report”) contains certain ~~forward-looking~~ statements ~~reflecting our~~that are, or may deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and that reflect management’s current expectations with respect to our operations, performance, financial condition, and other developments. These forward-looking statements may generally be identified by the use of the words “may,” “will,” “intends,” “plans,” projects,” “believes,” “should,” “expects,” “predicts,” “anticipates,” “estimates,” and similar ~~expressions.~~expressions or the negative of these terms or other comparable terminology. These statements are necessarily estimates reflecting management’s best judgment based upon current information and involve a number of risks, uncertainties and ~~uncertainties.~~assumptions. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made, and readers are advised that various factors, including, but not limited to, those set forth elsewhere in this Report, could affect our financial performance and could cause our actual results for future periods to differ materially from those anticipated or projected. While it is impossible to identify all such factors, such factors include, but are not limited to, our strategy of expanding our business through acquisitions of other businesses and other strategic transactions, such as the proposed Rubicon Transaction; the risk that we may fail to realize the expected benefits or strategic objectives of any acquisition or strategic transaction, or that we spend resources exploring acquisitions or strategic transactions that are not consummated; the impact of the coronavirus on worldwide economic conditions and on our businesses; risks associated with litigation, including contingent auto liability and insurance coverage; indemnification claims and other unforeseen claims and liabilities that may arise from an acquisition; economic and other conditions in the markets in which we operate (including rising inflation and interest rates); the risk that we may not have sufficient working capital to continue operations; instability in the financial markets; our dependence on key employees; impacts from climate change, including the increased focus by third-parties on sustainability issues and our ability to comply therewith; competition from parties who sell their businesses to us and from professionals who cease working for us; terrorist attacks and other acts of violence or war; security breaches or cybersecurity attacks; our compliance with applicable privacy, security and data laws; competition faced by our logistics services freight carriers with greater financial resources and from companies that operate in areas in which we plan to expand; our dependence on the availability of cargo space from third parties; recessions and other economic developments that reduce freight volumes; other events affecting the volume of international trade and international operations; risks arising from our logistics services business’ ability to manage staffing needs; competition faced in the freight forwarding, freight brokerage, logistics and supply chain management industry; industry consolidation and our ability to gain sufficient market presence with respect to our logistics services business; risks arising from our ability to comply with governmental permit and licensing requirements or statutory and regulatory requirements; seasonal trends; competition faced by our manufacturing (Indco) business from competitors with greater financial resources; Indco’s dependence on individual purchase orders to generate revenue; any decrease in the availability, increase in the cost or supply shortages, of raw materials used by Indco; Indco’s ability to obtain and retain skilled technical personnel; risks associated with product liability claims due to alleged defects in Indco’s products; risks arising from the environmental, health and safety regulations applicable to Indco; the reliance of our Indco and Life Sciences businesses on a single location to manufacture their products; the ability of our Life Sciences business to compete effectively; the ability of our Life Sciences business to introduce new products in a timely manner; product or other liabilities associated with the manufacture and sale of new products and services; changes in governmental regulations applicable to our Life Sciences business; the ability of our Life Sciences business to continually produce products that meet high quality standards such as purity, reproducibility and/or absence of cross-reactivity; the controlling influence exerted by our officers and directors and one of our stockholders; our inability to issue dividends in the foreseeable future; and risks related to ownership of our common stock, including volatility and the lack of a guaranteed continued public trading market for our common stock, and such other factors that may be identified from time to time in our Securities and Exchange Commission (“SEC”) filings. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those ~~risks identified in~~projected. You should not place undue reliance on any of our forward-looking statements which speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a more detailed discussion of these factors, see our periodic reports filed with the ~~Securities and Exchange Commission,~~SEC, including our most recent Annual Report on Form ~~10-K.~~

10-K for the fiscal year ended September 30, 2021.

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OVERVIEW

Janel Corporation (“Janel,” the “Company” or the “Registrant”) is a holding company with subsidiaries in ~~two~~three business segments: Logistics (previously known as Global Logistics ~~Services~~Services), Life Sciences and Manufacturing. ~~The Company’s~~In the fourth quarter of 2021, our former Global Logistics Services segment ~~comprises several wholly-owned subsidiaries, collectively known as “Janel Group.”~~was renamed “Logistics”; this change related to the name only and had no impact on the Company’s previously reported historical financial position, results of operations, cash flow or segment level results. The ~~Company’s Manufacturing segment comprises~~Company strives to create shareholder value primarily through three strategic priorities: supporting its ~~majority-owned INDCO subsidiary, which manufactures~~businesses’ efforts to make investments and ~~distributes industrial mixing equipment. Janel is a successor~~ to ~~a business originally formed in 1975. Janel is domiciled in~~build long-term profits; allocating Janel’s capital at high risk-adjusted rates of return; and attracting and retaining exceptional talent.

Management at the ~~state of Nevada. Its corporate headquarters is in Lynbrook, New York. Its website is located at http://www.janelcorp.com.~~

~~Janel’s management~~holding company focuses on significant capital allocation decisions, corporate governance and ~~support of its~~supporting Janel’s subsidiaries where appropriate. ~~The Company~~Janel expects to grow through its subsidiaries’ organic growth and by completing acquisitions. ~~Janel~~We plan to either ~~will~~ acquire businesses within ~~its~~our existing segments or ~~it will~~ expand ~~its~~our portfolio into new strategic segments. ~~Janel’s~~Our acquisition strategy focuses on reasonably-priced companies with strong and capable management teams, attractive existing business economics and stable and predictable earnings power.

Logistics

The Company’s Logistics segment is comprised of several wholly-owned subsidiaries. The Company’s Logistics segment is a non-asset based, full-service provider of cargo transportation logistics management services, including freight forwarding via air, ocean and land-based carriers, customs brokerage services, warehousing and distribution services, trucking, and other value-added logistics services. In ~~September 2014,~~addition to these revenue streams, the Company ~~purchased~~earns accessorial revenue in connection with its core services. Accessorial revenue includes, but is not limited to, fuel service charges, wait time fees, hazardous cargo fees, labor charges, handling, cartage, bonding and additional labor charges.

On September 21, 2021, the ~~equity~~Company completed a business combination whereby it acquired all of ~~Alpha International/President Container Lines~~the membership interests of Expedited Logistics and Freight Services, LLC. (“~~Alpha/PCL”~~ELFS”), and related subsidiaries which we include in our Logistics segment.

On December 31, 2020, the Company completed a ~~global logistics services company. Approximately one year later,~~business combination whereby it ~~purchased~~acquired substantially all of the ~~equity~~assets and certain liabilities of ~~Liberty International, Inc. (“Liberty”). In April 2017, it purchased the equity of W.J. Byrnes~~W.R. Zanes & Co. of LA., Inc., (“~~Byrnes”~~W.R. Zanes”)~~. These~~ which we include in our Logistics segment.

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Life Sciences

The Company’s Life Sciences segment is comprised of several wholly-owned subsidiaries.

The Company’s Life Sciences segment manufactures and distributes high-quality monoclonal and polyclonal antibodies, diagnostic reagents and other immunoreagents for biomedical research and provides antibody manufacturing for academic and industry research scientists.

Our Life Sciences segment also produces products for other life science companies ~~along with the legacy Janel Group, comprise Janel Corporation’s Global Logistics Services segment, which focuses~~ on ~~international transportation and customs clearance. In March 2016,~~an original equipment manufacturer (OEM) basis.

On December 4, 2020, the Company ~~purchased INDCO,~~completed a business combination whereby it acquired all of the membership interests of ImmunoChemistry Technologies, LLC. (“ICT”) which we include in our Life Sciences segment.

Manufacturing

The Company’s Manufacturing segment is comprised of Indco, Inc. (“~~INDCO”~~Indco”). Indco is a majority-owned subsidiary of the Company that manufactures and distributes mixing equipment and apparatus for specific applications within various industries. Indco’s customer base is comprised of small- to mid-sized businesses as well as other larger customers for which Indco fulfills repetitive production orders.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our Condensed Consolidated Financial Statements have been prepared in ~~order to diversify cash flow streams. INDCO comprises Janel Corporation’s Manufacturing segment.~~

~~The Company employs 121 full-time and five part-time people~~accordance with generally accepted accounting principles in the United States. ~~None~~These generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of ~~these employees is covered by~~assets, liabilities, net sales and expenses during the reporting period.

Our senior management has reviewed the critical accounting policies and estimates with the Audit Committee of our Board of Directors. For a ~~collective bargaining agreement. We have experienced no work stoppages~~description of the Company’s critical accounting policies and ~~consider relations with our employees~~estimates, refer to ~~be good.~~

~~- 12 -~~

“Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~

~~Global Logistics Services – Three~~Operations—Critical Accounting Estimates” in our Annual Report on Form 10-K filed with the SEC on December 27, 2021. Critical accounting policies are those that are most important to the portrayal of our financial condition, results of operations and cash flows and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. If actual results were to differ significantly from estimates made, the reported results could be materially affected. There were no significant changes to our critical accounting policies during the nine months ended June 30, ~~2017~~2022.

NON-GAAP FINANCIAL MEASURES

While we prepare our financial statements in accordance with U.S. GAAP, we also utilize and ~~2016~~

~~Revenues.~~ ~~Total~~present certain financial measures, in particular adjusted operating income, which is not based on or included in U.S. GAAP (we refer to these as “non-GAAP financial measures”).

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Organic Growth

Our non-GAAP financial measure of organic growth represents revenue growth excluding revenue from acquisitions within the preceding 12 months.

The organic growth presentation provides useful period-to-period comparison of revenue results as it excludes revenue from acquisitions that would not be included in the comparable prior period.

Adjusted Operating Income

As a result of our acquisition strategy, our net income includes material non-cash charges relating to the amortization of customer-related intangible assets in the ordinary course of business as well as other intangible assets acquired in our acquisitions. Although these charges may increase as we complete more acquisitions, we believe we will be growing the value of our intangible assets such as customer relationships. Because these charges are not indicative of our operations, we believe that adjusted operating income is a useful financial measure for investors because it eliminates the effect of these non-cash costs and provides an important metric for our business that is more representative of the actual results of our operations.

Adjusted operating income (which excludes the non-cash impact of amortization of intangible assets, stock-based compensation and cost recognized on the sale of acquired inventory valuation) is used by management as a supplemental performance measure to assess our business’s ability to generate cash and economic returns.

Adjusted operating income is a non-GAAP measure of income and does not include the effects of preferred stock dividends, interest and taxes.

We believe that organic growth and adjusted operating income provide useful information in understanding and evaluating our operating results in the same manner as management. However, organic growth and adjusted operating income are not financial measures calculated in accordance with U.S. GAAP and should not be considered as a substitute for total revenue, operating income or any other operating performance measures calculated in accordance with U.S. GAAP. Using these non-GAAP financial measures to analyze our business has material limitations because the calculations are based on the subjective determination of management regarding the nature and classification of events and circumstances that users of the financial statements may find significant.

In addition, although other companies may report measures titled organic growth, adjusted operating income or similar measures, such non-GAAP financial measures may be calculated differently from how we calculate our non-GAAP financial measures, which reduces their overall usefulness as comparative measures. Because of these limitations, you should consider organic growth and adjusted operating income alongside other financial performance measures, including total revenue, operating income and our other financial results presented in accordance with U.S. GAAP.

Results of Operations – Janel Corporation

Our results of operations and period-over-period changes are discussed in the following section. The tables and discussion should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and the notes thereto.

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Our consolidated results of operations are as follows:

(in thousands)	Three Months Ended June 30, 2022		Three Months Ended June 30, 2021		Nine Months Ended June 30, 2022		Nine Months Ended June 30, 2021
Revenue	$	78,984	$	34,826	$	243,149	$	91,446
Forwarding expenses and cost of revenues		61,819		26,058		193,986		68,680
Gross profit		17,165		8,768		49,163		22,766
Operating expenses		13,994		7,446		41,203		20,114
Income from operations		3,171		1,322		7,960		2,652
Net income		2,158		870		5,119		1,721
Adjusted operating income	$	3,822	$	1,868	$	10,638	$	4,301

Consolidated revenues for the three months ended June 30, 2022 were $78,984, which was $44,158 or 127% higher than the prior year period. Revenues over this period increased due to a recovery from ~~continuing~~the impact of the COVID-19 pandemic experienced in the prior year period as well as an increase in revenue of $27,759 from an acquisition. Consolidated revenues for the nine months ended June 30, 2022 were $243,149, which was $151,703 or 166% higher than the prior year period. Revenues over this period increased across all three segments due to a recovery from the impact of the COVID-19 pandemic experienced in the prior year period as well as an increase in revenue of $78,367 from acquisitions.

Income from operations for the three months ended June 30, ~~2017 were $17,963,837,~~2022 was $3,171 compared with $1,322 in the prior year period. Income from operations for the nine months ended June 30, 2022 was $7,960 compared with $2,652 in the prior year period. The increase for both the three and nine months ended June 30, 2022 resulted from a recovery from the impact of the COVID-19 pandemic experienced in the prior year period as ~~compared to $15,425,092~~well as an increase in income from operations of $1,723 and $3,977, respectively from acquisitions, partially offset by stock-based compensation and higher spending in the Corporate segment.

Net income for the three months ended June 30, ~~2016. This is an increase~~2022 totaled $2,158 or $1.93 per diluted share, compared to net income of ~~$2,538,745,~~$870 or ~~16.5%. The increase is due to revenue of $1,104,742 derived from Byrnes customers and $1,434,003 derived from new and existing non-Byrnes customers.~~

~~Forwarding Expenses.~~ ~~Total forwarding expenses from continuing operations~~$0.88 per diluted share for the three months ended June 30, ~~2017 were $14,455,926, as~~2021. Net income for the nine months ended June 30, 2022 totaled $5,119 or $4.85 per diluted share, compared to ~~$12,157,139~~net income of $1,721 or $1.75 per diluted share for the nine months ended June 30, 2021.

Adjusted operating income for the three months ended June 30, ~~2016. This is an increase of $2,298,787, or 18.9%.~~2022 increased to $3,822 versus $1,868 in the prior year period. Adjusted operating income for the nine months ended June 30, 2022 increased to $10,638 versus $4,301 in the prior year period. The increase ~~is due to forwarding expenses of $691,411 attributable to Byrnes customers~~for both the three and ~~$1,607,376 associated with new and existing non-Byrnes customers.~~

~~Certain items have been categorized as “corporate” expenses attributable to overall management~~nine months ended June 30, 2022 resulted from a recovery in profits from the impact of the ~~Company~~COVID-19 pandemic for our segments and ~~other non-segment specific activities. These expenses are discussed below under “Corporate Selling, General and Administrative Expenses.”~~ the contribution of income from acquisitions.

The following ~~discussion~~table sets forth a reconciliation of ~~selling, general~~operating income to adjusted operating income:

(in thousands)	Three Months Ended June 30, 2022		Three Months Ended June 30, 2021		Nine Months Ended June 30, 2022		Nine Months Ended June 30, 2021
Income from operations	$	3,171	$	1,322	$	7,960	$	2,652
Amortization of intangible assets		489		288		1,485		832
Stock-based compensation		32		31		800		85
Cost recognized on sale of acquired inventory		130		227		393		732
Adjusted operating income	$	3,822	$	1,868	$	10,638	$	4,301

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Results of Operations – Logistics – Three and ~~administrative expenses in the Global~~Nine Months Ended June 30, 2022 and 2021

Our Logistics ~~Service segment excludes these “corporate” items.~~

~~Selling, General~~business helps its clients move and ~~Administrative Expenses.~~manage freight efficiently to reduce inventories and to increase supply chain speed and reliability. Key services include arrangement of freight forwarding by air, ocean and ground, customs entry filing, warehousing, cargo insurance procurement, logistics planning, product repackaging and online shipment tracking.

	Three Months Ended June 30,						Nine Months Ended June 30,
	2022			2021			2022			2021
(in thousands)
Revenue	$	73,684		$	29,369		$	226,313		$	76,002
Forwarding expenses		59,889			24,173			187,780			62,818
Gross Profit		13,795			5,196			38,533			13,184
Gross profit margin		18.7	%		17.7	%		17.0	%		17.3	%
Selling, general & administrative		10,387			4,523			29,802			11,640
Income from operations	$	3,408		$	673		$	8,731		$	1,544

Revenue

Total ~~selling, general and administrative expenses from continuing operations~~revenue for the three months ended June 30, ~~2017 were $2,870,235,~~2022 was $73,684 as compared to ~~$2,613,697~~$29,369 for the three months ended June 30, ~~2016. This is~~2021, an increase of $44,315 or 151%. Of the increase in revenue, an acquisition accounted for $27,759 of additional revenue compared to the prior year period and $16,556 represented organic growth and increased revenues resulting from the rise in transportation rates as a result of capacity issues globally.

Total revenue for the nine months ended June 30, 2022 was $226,313 as compared to $76,002 for the nine months ended June 30, 2021, an increase of ~~$256,538,~~$150,311 or ~~9.8%~~198%. ~~The~~Of the increase ~~primarily is~~in revenue, two acquisitions accounted for $77,112 of additional revenue compared to the prior year period and $73,199 represented organic growth and increased revenues resulting from the rise in transportation rates as a result of capacity issues globally.

Gross Profit

Gross profit for the three months ended June 30, 2022 was $13,795, an increase of $8,599, or 165%, as compared to $5,196 for the three months ended June 30, 2021. An acquisition accounted for $7,182 of additional gross profit compared to the prior year period. A recovery in business accounted for the balance of the gross profit increase compared with the depressed levels in the prior fiscal year and drove organic gross profit growth of 27%. Gross margin as a percentage of revenue increased to 18.7% for the three months ended June 30, 2022, compared to 17.7% for the prior year period, due to ~~additional selling, general~~higher gross profit margins at an acquired business partially offset by lower gross profit margins due to the increase in transportation rates.

Gross profit for the nine months ended June 30, 2022 was $38,533, an increase of $25,349, or 192%, as compared to $13,184 for the nine months ended June 30, 2021. This increase was mainly the result of increased revenue from two acquisitions and ~~administrative costs associated with~~organic growth in our base business due to a global economic recoveryfrom the ~~integration~~impact of the ~~Byrnes offices. As~~COVID-19 pandemic. Gross profit as a percentage of revenue ~~selling,~~decreased to 17.0% compared to 17.3% for the prior year period due to the increase in transportation rates versus the prior year period partially offset by higher gross profit margins at an acquired business.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended June 30, ~~2017~~ 2022 were ~~16.0%,~~$10,387, as compared to ~~16.9%~~$4,523 for the three months ended June 30, ~~2016.~~

~~Interest Expense~~~~. Total interest expense~~2021. This increase of $5,864, or 130%, was mainly due to additional expenses from an acquired business. As a percentage of revenue, selling, general and administrative expenses were 14.1% and 15.4% of revenue for the three months ended June 30, ~~2017 was $116,672, as compared to $120,988 for the three months ended June 30, 2016. This is a decrease of ($4,316), or (3.6%).~~2022 and 2021, respectively. The ~~decrease was due to an improvement~~decline in ~~working capital for the period that lowered average borrowings against the Presidential Borrowing Facility referenced below.~~

~~Income from Continuing Operations before Income Taxes.~~ As a result of the above, income from continuing operations before income taxes for the three months ended June 30, 2017 was $521,004, as compared to $533,268 for the three months ended June 30, 2016. This is a decrease of ($12,264), or (2.3%).

~~Manufacturing – Three months ended June 30, 2017 and 2016~~

~~Revenues.~~ Total revenues for the three months ended June 30, 2017 were $2,283,041, as compared to $2,080,361 for the three months ended June 30, 2016. This is an increase of $202,680, or 9.7%. The increase primarily is due to growth in demand for core INDCO manufactured mixer products.

~~Cost of Revenues.~~ Total cost of revenues for the three months ended June 30, 2017 was $989,313 as compared to $961,587 for the three months ended June 30, 2016. This is an increase of $27,726, or 2.9%. The increase primarily is due to costs associated with meeting the growth in demand described above.

~~Gross Margin~~. Total gross margin for the three months ended June 30, 2017 was $1,293,728, as compared to $1,118,774 for the three months ended June 30, 2016. This is an increase of $174,954, or 15.6%. As a percentage of revenue, gross margin for the three months ended June 30, 2017 was 56.7%, as compared to 53.8% for the three months ended June 30, 2016. The increase primarily is due to growth in sales of relatively higher margin products.

~~Selling, General and Administrative Expenses.~~ ~~Total~~ selling, general and administrative expenses ~~for the three months ended June 30, 2017 were $635,680,~~ as compared to $594,186 for the three months ended June 30, 2016. This is an increase of $41,494 or 7.0%. The increase primarily is due to additional sales expenses associated with the growth of the business.

~~Interest Expense~~. Total interest expense for the three months ended June 30, 2017 was $67,608 as compared to $78,904 for the three months ended June 30, 2016. This is a decrease of ($11,296), or (14.3%). The decrease is due to paydown of principal on the First Merchants Bank Borrowing Facility referenced below.

~~Income from Continuing Operations before Income Taxes.~~ As a result of the above, income from continuing operations before income taxes for the three months ended June 30, 2017 was $587,940, as compared to $443,184 for the three months ended June 30, 2016. This is an increase of $144,756, or 32.7%.

~~- 13 -~~

~~Corporate – Three months ended June 30, 2017 and 2016~~

~~Corporate Selling, General and Administrative Expenses~~. Total corporate selling, general and administrative expenses from continuing operations for the three months ended June 30, 2017 were $496,396, as compared to $253,053 for the three months ended June 30, 2016. This is an increase of $243,343, or 96.2%. The increase is due to the recategorization of certain costs, previously included in the Global Logistics Services segment, as “corporate” costs. These include primarily the salaries of executives whose responsibilities have shifted from the Global Logistics Service segment to Janel Corporation corporate development.

~~Amortization of Intangible Assets.~~Total amortization of intangible assets for the three months ended June 30, 2017 was $193,166 as compared to $200,737 for the three months ended June 30, 2016. This is a decrease of ($7,571), or (3.8%). The decrease is due to an amortization adjustment related to INDCO in the first quarter following the INDCO acquisition.

~~Net Loss~~. As a result of the above, net loss for the three months ended June 30, 2017 was ($689,562), as compared to ($453,790) for the three months ended June 30, 2016. This is a decrease of ($235,772) or (52.0%).

~~Consolidated income taxes – Three months ended June 30, 2017 and 2016~~

~~The company recorded a net income tax provision for the three months ended June 30, 2017 of $129,419, as compared to $36,604 for the three months ended June 30, 2016.~~

~~Global Logistics Services – Nine months ended June 30, 2017 and 2016~~

~~Revenues.~~ Total revenues from continuing operations for the nine months ended June 30, 2017 were $49,499,193, as compared to $53,935,789 for the nine months ended June 30, 2016. This is a decrease of ($4,436,596), or (8.2%). The decrease primarily is due to the loss of a low-margin, high-revenue customer, offset by revenues from new customers, including those derived from the Byrnes acquisition.

~~Forwarding Expenses.~~ Total forwarding expenses from continuing operations for the nine months ended June 30, 2017 were $39,810,183 as compared to $44,171,758 for the nine months ended June 30, 2016. This is a decrease of ($4,361,575), or (9.9%). The decrease primarily is due to reduction in expenses associated with the loss of the low-margin, high-revenue customer referenced above, offset by additional expenses associated with new customer revenues, including those derived from the Byrnes acquisition.

For the current fiscal year, certain items have been categorized as “corporate” expenses attributable to overall management of Janel and other non-segment specific activities. These expenses are discussed below under “Corporate Selling, General and Administrative Expenses.” The following discussion of selling, general and administrative expenses in the Global Logistics Service segment excludes these “corporate” items.

~~Selling, General and Administrative Expenses.~~ Total selling, general and administrative expenses from continuing operations for the nine months ended June 30, 2017 were $8,001,437 as compared to $8,086,749 for the nine months ended June 30, 2016. This is a decrease of ($85,312), or (1.1%). The decrease is due to certain cost reduction initiatives enacted in prior periods. As a percentage of revenue ~~selling,~~largely reflected the rise in transportation rates as a result of capacity issues globally and favorable operating leverage due to strong organic growth.

Selling, general and administrative expenses for the nine months ended June 30, ~~2017~~2022 were ~~16.2%,~~$29,802, as compared to ~~15.0%~~$11,640 for the nine months ended June 30, ~~2016.~~2021. This ~~is an~~ increase of ~~1.2%. The increase primarily is~~$18,162, or 156%, was mainly due to ~~the reduction in revenues associated with the loss~~additional expenses from acquired businesses. As a percentage of ~~the low-margin, high-revenue customer referenced above.~~

~~Interest Expense~~~~. Total interest expense~~revenue, selling, general and administrative expenses were 13.2% and 15.3% of revenue for the nine months ended June 30, ~~2017 was $356,362,~~2022 and 2021, respectively. The decline in selling, general and administrative expenses as a percentage of revenue largely reflected the rise in transportation rates as a result of capacity issues globally and favorable operating leverage due to strong organic growth.

Income from Operations

Income from operations increased to $3,408 for the three months ended June 30, 2022, as compared to ~~$382,804~~income from operations of $673 for the three months ended June 30, 2021, an increase of $2,735. Income from operations increased as a result of the contribution of revenue from an acquisition and favorable operating leverage from revenue growth. Operating margin as a percentage of gross profit for the three months ended June 30, 2022 was 24.7% compared to 13.0% in the prior year period largely due to operating leverage from significantly higher gross profit as business recovered compared with the depressed levels in the prior year period.

Income from operations increased to $8,731 for the nine months ended June 30, ~~2016. This is a decrease of ($26,442), or (6.9%). The decrease was due~~2022, as compared to ~~an improvement in working capital for the period, which lowered average borrowings against the Presidential Borrowing Facility referenced below.~~

~~Income from Continuing Operations before Income Taxes.~~ ~~As a result of the above, income from continuing operations before income taxes~~$1,544 for the nine months ended June 30, ~~2017 was $1,331,211,~~2021, an increase of $7,187, or 465%. Income from operations increased during the nine months ended June 30, 2022 as ~~compared~~ a result of acquisitions and favorable leverage from revenue growth relative to ~~$1,294,478~~the prior year period. Our operating margin as a percentage of gross profit for the nine months ended June 30, ~~2016. This is~~2022 was 22.7% compared to 11.7% in the prior year period largely due to operating leverage from significantly higher gross profit as business recovered compared with the depressed levels in the prior year period.

Results of Operations – Life Sciences – Three and Nine Months Ended June 30, 2022 and 2021

Table of ~~$36,733, or 2.8%.~~

~~Manufacturing~~Contents

Life Sciences – ~~Nine~~Selected Financial Information:

Three Months Ended
June 30,

Nine Months Ended
June 30,

2022 2021 2022 2021
(in thousands)
Revenue $ 2,738 $ 3,384 $ 9,257 $ 8,973
Cost of sales 518 714 2,123 2,145
Cost recognized upon sales of acquired inventory 130 227 393 732
Gross profit 2,090 2,443 6,741 6,096
Gross profit margin 76.3 % 72.2 % 72.8 % 67.9 %
Selling, general and administrative 1,225 1,084 3,758 3,273
Income from Operations $ 865 $ 1,359 $ 2,983 $ 2,823
Revenue

Total revenue was $2,738 and $3,384 for the three months ended June 30, ~~2017~~2022 and ~~2016~~

~~INDCO, which comprises~~2021, respectively, reflecting a decrease of $646 or 19.1% compared to the ~~Company’s Manufacturing segment,~~prior year period due to the timing of orders, in particular for diagnostic reagents.

Total revenue was ~~purchased as of March 1, 2016. Therefore, prior period data includes only the results of the four months in that period that the Company owned INDCO.~~

~~Revenues.~~ ~~Total revenues~~$9,257 and $8,973 for the nine months ended June 30, ~~2017 were $6,444,205~~2022 and ~~$2,792,667~~ 2021, respectively, remained relatively unchanged with an increase of $284 or 3.2%.

Gross Profit

Gross profit was $2,090 and $2,443 for the ~~four~~three months ended June 30, ~~2016.~~

~~Cost~~2022 and 2021, respectively, a decrease of ~~Revenues.~~ ~~Total~~$353 or 14.5%. During the three months ended June 30, 2022 and 2021, gross profit margin was 76.3% and 72.2%, respectively, as cost recognized upon sale of ~~revenues~~acquired inventory declined and product mix improved.

Gross profit was $6,741 and $6,096 for the nine months ended June 30, ~~2017 was $2,888,458~~2022 and ~~$1,266,878 for~~ 2021, respectively, an increase of $645 or 10.6%. In the ~~four~~nine months ended June 30, ~~2016.~~

~~- 14 -~~

2022 and 2021, the Life Sciences segment had a gross profit margin of 72.8% and 67.9%, respectively. Gross profit margin for both periods increased in line with revenue with consistent contributions from an acquisition and as cost recognized upon the sale of acquired inventory decreased.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the Life Sciences segment were $1,225 and $1,084 for the three months ended June 30, 2022 and 2021, respectively. Selling, general and administrative expenses were $3,758 and $3,273 for the nine months ended June 30, 2022 and 2021, respectively. The year-over-year increases for both periods was largely due to an acquired business.

Income from Operations

Income from operations for the three months ended June 30, 2022 and 2021 was $865 and $1,359, respectively, a decrease of $494 or 36.4%, due to the timing of orders, in particular to diagnostic reagents. Income from operations for the nine months ended June 30, 2022 and 2021 was $2,983 and $2,823, respectively, an increase of $160 or 5.7%, largely due to positive operating leverage from the increase in revenue as a result of the recovery from the impact of the COVID-19 pandemic experienced in the prior fiscal year and lower cost recognized on acquired inventory and, to a lesser extent, a contribution from an acquisition.

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Results of Operations - Manufacturing – Three and Nine Months Ended June 30, 2022 and 2021

The Company’s Manufacturing segment reflects its majority-owned Indco subsidiary, which manufactures and distributes industrial mixing equipment.

Manufacturing – Selected Financial Information:

Three Months Ended
June 30,

Nine Months Ended
June 30,

2022 2021 2022 2021
(in thousands)
Revenue $ 2,562 $ 2,073 $ 7,579 $ 6,471
Cost of sales 1,282 944 3,690 2,985
Gross profit 1,280 1,129 3,889 3,486
Gross profit margin 50.0 % 54.5 % 51.3 % 53.9 %
Selling, general and administrative 676 682 2,170 2,007
Income from Operations $ 604 $ 447 $ 1,719 $ 1,479

Revenue
Total revenue was $2,562 and $2,073 for the three months ended June 30, 2022 and 2021, respectively, an increase of $489. Total revenue was $7,579 and $6,471 for the nine months ended June 30, 2022 and 2021, respectively, an increase of $1,108, or 17.1%. The increase in revenue for the nine months ended June 30, 2022 reflected a broad increase across the business and higher product pricing relative to the COVID-19-related slowdown reflected in the prior year period.

Gross ~~Margin~~Profit

Gross profit was $1,280 and $1,129 for the three months ended June 30, 2022 and 2021, respectively, an increase of $151, or 13.8%. ~~Total gross~~ Gross profit margin for the three months ended June 30, 2022 and 2021 was 50.0% and 54.5%, respectively. Gross profit was $3,889 and $3,486 for the nine months ended June 30, 2022 and 2021, respectively, an increase of $403, or 11.6%. Gross profit margin for the nine months ended June 30, ~~2017~~ 2022 and 2021 was ~~$3,555,748~~51.3% and ~~$1,525,789~~53.9%, respectively. The year-over-year decrease in gross profit margin for both periods was generally due to the mix of business.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $676 and $682 for the ~~four~~three months ended June 30, ~~2016.~~

~~Selling, General~~2022 and ~~Administrative Expenses.~~ ~~Total selling,~~2021, respectively, a decrease of $6 or 1.0%. Selling, general and administrative expenses were $2,170 and $2,007 for the nine months ended June 30, ~~2017 were $1,911,848~~2022 and ~~$805,985~~2021, respectively, an increase of $163 or 8.1%. The increase in expenses relative to revenue for the ~~four~~three- and nine-month periods reflected the mix of business.

Income from Operations

Income from operations was $604 for the three months ended June 30, ~~2016.~~

~~Interest Expense~~~~. Total interest expense~~2022 compared to $447 for the three months ended June 30, 2021, representing a 35.1% increase from the prior year period due to favorable order timing versus the prior year period. Income from operations was $1,719 for the nine months ended June 30, 2022 compared to $1,479 for the nine months ended June 30, ~~2017~~2021, representing an 16.3% increase from the prior year period. The increase was ~~$210,445~~due to favorable operating leverage as revenue recovered from the impact of the COVID-19 pandemic.

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Results of Operations – Corporate and ~~$93,861 for~~Other – Three and Nine Months Ended June 30, 2022 and 2021

Below is a reconciliation of income from operating segments to net income available to common stockholders.

	Three Months Ended June 30,						Nine Months Ended June 30,
(in thousands)	2022			2021			2022			2021
Total income from operating segments	$	4,877		$	2,479		$	13,433		$	5,846
Corporate expenses		(1,185	)		(838	)		(3,188	)		(2,277	)
Amortization expense		(489	)		(288	)		(1,485	)		(832	)
Stock-based compensation		(32	)		(31	)		(800	)		(85	)
Total Corporate expenses		(1,706	)		(1,157	)		(5,473	)		(3,194	)
Interest expense		(299	)		(141	)		(847	)		(418	)
Gain on Paycheck Protection Program loan forgiveness		-			-			-			135
Net income before taxes		2,872			1,181			7,113			2,369
Income tax expense		(714	)		(311	)		(1,994	)		(648	)
Net income		2,158			870			5,119			1,721
Preferred stock dividends		(71	)		(197	)		(515	)		(566	)
Non-controlling interest dividends		-			-			(61	)		-
Net Income Available to Common Stockholders	$	2,087		$	673		$	4,543		$	1,155

Total Corporate Expenses

Total Corporate expenses, which include amortization of intangible assets, stock-based compensation and merger and acquisition expenses, increased by $549 or 47.5%, to $1,706in the ~~four~~three months ended June 30, ~~2016.~~

~~Income from Continuing Operations before Income Taxes.~~ ~~Income from continuing operations before income taxes~~2022 as compared to $1,157 for the three months ended June 30,2021. Total Corporate expenses increased by $2,279 or 71.4%, to $5,473 for the nine months ended June 30, ~~2017 was $1,425,954 and $622,610 for the four months ended June 30, 2016.~~

~~Corporate – Nine months ended June 30, 2017 and 2016~~

~~Corporate Selling, General and Administrative Expenses~~~~. Total corporate selling, general and administrative expenses from continuing operations~~2022 as compared to $3,194 for the nine months ended June 30, ~~2017 were $1,293,174 as compared~~2021. The increase in both periods was due primarily to ~~$906,174~~stock-based compensation related to restricted stock issuance with immediate vesting, higher accounting related professional expense, increased merger and acquisition expenses and increases in amortization of intangible expenses. We incur merger and acquisition deal-related expenses and intangible amortization at the Corporate level rather than at the segment level.

Interest Expense

Interest expense for the consolidated company increased $158 or 112.1%, to $299 for the three months ended June 30, 2022 from $141 for the three months ended June 30,2021. Interest expense for the consolidated company increased by $429 or 102.6%, to $847 for the nine months ended June 30, ~~2016. This is~~2022 from $418 for the nine months ended June 30,2021. The increase in both periods was primarily due to higher average debt balances to support our acquisition efforts and higher interest rates.

Income Tax Expense

On a consolidated basis, the Company recorded an income tax expense of $714 for the three months ended June 30, 2022, as compared to an income tax expense of $311 for the three months ended June 30,2021. On a consolidated basis, the Company recorded an income tax expense of $1,994 for the nine months ended June 30, 2022, as compared to an income tax expense of $648 for the nine months ended June 30,2021. The increase in expense for both periods was primarily due to an increase in pretax income.

Table of ~~$387,000,~~Contents

Preferred Stock Dividends

Preferred stock dividends include any dividends accrued but not paid on the Company’s Series C Cumulative Preferred Stock (the “Series C Preferred Stock”). For the three months ended June 30, 2022 and 2021, preferred stock dividends were $71 and $197, respectively, representing a decrease of $126, or ~~42.7%~~64.0%. For the nine months ended June 30, 2022 and 2021, preferred stock dividends were $515 and $566, respectively, representing a decrease of $51, or 9.0%. The ~~increase is due~~decrease in preferred stock dividends in both periods was the result of the Company retiring $6,000 of Series C Preferred Stock on March 31, 2022 and the annual dividend rate change from 9% to 5%.

Net Income

Net income was $2,158, or $1.93 per diluted share, for the ~~recategorization~~three months ended June 30, 2022 compared to net income of ~~certain costs, previously included in~~$870 or $0.88 per diluted share, for the Global Logistics Services segment, as “corporate” costs. These include primarily the salaries of executives whose responsibilities have shifted from the Global Logistics Service segment to Janel Corporation corporate development.

~~Amortization of Intangible Assets.~~~~Total amortization of intangible assets~~three months ended June 30,2021.

Net income was $5,119, or $4.85 per diluted share, for the nine months ended June 30, ~~2017 was $571,497, as~~2022 compared to ~~$399,582~~net income of $1,721, or $1.75 per diluted share, for the nine months ended June 30, ~~2016. This is an increase of $171,915, or 43.0%.~~2021. The increase isfor both periods was primarily due to higher revenues and gross profit, partially offset by higher selling, general and administrative expenses across our operating segments and at Corporate.

Income Available to Common Stockholders

Income available to holders of Common Stock was $2,087, or $1.87 per diluted share, for the ~~full-year impact~~three months ended June 30, 2022 compared to income available to holders of ~~goodwill amortization associated with~~Common Stock of $673, or $0.68 per diluted share, for the ~~March 2016 purchase~~three months ended June 30,2021.

Income available to holders of ~~INDCO and additional goodwill amortization associated with the April 2017 purchase of Byrnes. These amounts do not include amortization associated with the INDCO term loan origination fee.~~

~~Net Loss~~~~. As a result of the above, net loss~~Common Stock was $4,543, or $4.31 per diluted share, for the nine months ended June 30, ~~2017 was ($1,864,671) as~~2022 compared to ~~($1,305,756)~~income available to holders of Common Stock of $1,115, or $1.17 per diluted share, for the nine months ended June 30, ~~2016. This is a decrease of ($558,915) or (42.8%).~~

~~Consolidated income taxes – Nine months ended June 30, 2017 and 2016~~

2021. The ~~company recorded a~~increase in net income ~~tax provision~~ for both periods was primarily due to higher revenues, partially offset by higher selling, general and administrative expenses across our businesses and Corporate in both periods and an increase in the ~~nine months ended June 30, 2017~~dividend rate with respect to the Series C Stock as of ~~$356,257, as compared~~January 1, 2021 to ~~$75,181 for the nine months ended June 30, 2016.~~

~~Liquidity and Capital Resources~~

~~General.~~8%.

LIQUIDITY AND CAPITAL RESOURCES

General

Our ability to satisfy ~~our~~ liquidity requirements, ~~which derive from~~including satisfying debt obligations and fund working capital, ~~needs,~~ day-to-day operating expenses and capital expenditures, depends upon ~~our~~ future performance, which is subject to general economic conditions, competition and other factors, some of which are beyond our control. ~~We depend~~Our Logistics segment depends on ~~our~~ commercial credit facilities to fund ~~our~~ day-to-day operations as there is a ~~timing~~ difference between ~~our~~the timing of collection cycles and the timing of ~~our~~ payments to vendors.

~~Janel’s~~

As a customs broker, our Logistics segment makes significant cash advances for a select group of our credit-worthy customers. These cash advances are for customer obligations such as the payment of duties and taxes to customs authorities primarily in the United States. Increases in duty rates could result in increases in the amounts we advance on behalf of our customers. Cash advances are a “pass through” and are not recorded as a component of revenue and expense. The billings of such advances to customers are accounted for as a direct increase in accounts receivable from the customer and a corresponding increase in accounts payable to governmental customs authorities. These “pass through” billings can influence our traditional credit collection metrics.

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For customers that meet certain criteria, we have agreed to extend payment terms beyond our customary terms. Management believes that it has established effective credit control procedures and has historically experienced relatively insignificant collection problems.

Our subsidiaries depend on commercial credit facilities to fund day-to-day operations as there is a difference between the timing of collection cycles and the timing of payments to vendors. Generally, we do not make significant capital expenditures.

Our cash flow performance for the ~~nine months ending June 30, 2017 is~~2022 fiscal year may not necessarily be indicative of future cash flow performance.

Cash ~~Flows~~flows from ~~Operating Activities.~~operating activities

Net cash provided by operating activities was $8,678 for the nine months ended June 30, 2022, versus $139 provided by operating activities for the nine months ended June 30, ~~2017 was $2,828,686, as compared to $1,039,570~~2021. The increase in cash provided by operations for the nine months ended June 30, ~~2016. This is an increase of $1,789,116, or 172.1%. The increase primarily is due~~2022 compared to ~~changes in accounts payable~~the prior year period was driven principally by higher profits and ~~accrued liabilities, offset by changes in accounts receivable.~~

lower net working capital at our Logistics segment.

Cash ~~Flows~~flows from ~~Discontinued Operating Activities.~~investing activities

Net cash used in ~~discontinued operating~~investing activitiestotaled $589 for the nine months ended June 30, 2022, versus $3,001 for the nine months ended June 30, ~~2017 was $46,878, which amount was reported within continuing operations in 2017, as compared to $184,845~~2021. We used $477 for the ~~nine months ending June 30, 2016. This is a decrease~~ acquisition of ~~($137,967), or (74.6%). The 2016 figure includes the settlement of a lawsuit involving the Company's discontinued food business.~~

~~Cash Flows from Investing Activities~~~~. Net cash used in investing activities~~property and equipment for the nine months ended June 30, ~~2017 was $120,132, as~~2022 compared to ~~$11,042,213~~$2,874 for the acquisition of two businesses and $127 for the acquisition of property and equipment for the nine months ended June 30, ~~2016. The decrease reflects the INDCO acquisition in the prior period.~~

2021.

Cash ~~Flows~~flows from ~~Financing Activities~~. financing activities

Net cash ~~(used in)~~used in financing activities was $10,487 for the nine months ended June 30, 2022, versus net cash provided by financing activities of $2,439 for the nine months ended June 30, 2021. Net cash used in financing activities for the nine months ended June 30, ~~2017 was ($1,784,201) as compared to $9,820,642 for the nine months ended June 30, 2016. The cash used in financing activities for the nine months ending June 30, 2017~~2022 primarily ~~went toward the second of three annual earnout payments associated with the 2014 acquisition of Alpha/PCL and toward~~included repayment of ~~the First Merchants Bank Borrowing Facility associated with the INDCO acquisition. The~~funds from our line of credit, repurchase of Series C Stock and dividends paid to holders of Series C Stock, repayment of funds from our term loan and notes payable related party, partially offset by proceeds from stock option exercises. Net cash provided by financing activities for the nine months ended June 30, ~~2016~~2021 primarily ~~came~~included funds from ~~the First Merchants Bank Borrowing Facility and the sale of additional Preferred Series C shares, both associated with the INDCO acquisition.~~

~~- 15 -~~

~~Global Logistics Services~~

~~Presidential Financial Corporation Borrowing Facility.~~ On March 27, 2014, Janel Corporation and several of its subsidiaries within its Global Logistics Services segment (collectively, the “Janel Borrowers”), entered into a Loan and Security Agreement with Presidential Financial Corporation (“Presidential”) with respect to a revolvingour line of credit ~~facility (the “Presidential Facility”). As currently amended, the Presidential Facility provides that the Janel Borrowers can borrow up to $10,000,000, limited to 85%~~partially offset by repayments of the Janel Borrowers’ aggregate outstanding eligible accounts receivable, subject to adjustment as set forth in the Loan and Security Agreement. Interest will accrue at an annual rate equal to five percent above the greater of (a) the prime rate of interest quoted in The Wall Street Journal from time to time, or (b) 3.25%. The Janel Borrowers’ obligations under the Presidential Facility are secured by the assets of the Janel Borrowers. The Loan Security Agreement requires, among other things, that the Company, on a monthly basis, maintain a “minimum fixed charge covenant ratio” and “tangible net worth,” both as defined. The Presidential Facility will expire on March 27, 2018, subject to earlier termination as provided in the Loan and Security Agreement, unless renewed.

~~Working Capital Requirements.~~~~Janel Group’s cash needs are currently met by cash flow from operations, the Presidential Facility and cash on hand.~~ term loans.

Off-Balance Sheet Arrangements

As of June 30, ~~2017, the Company~~2022, we had $662,442 available under its Presidential Facility and $1,232,102 in cash. The Company believes that current financial resources will be sufficient to finance Janel Group operations and obligations (current and long-term liabilities) for the long- and short-terms. However, Janel Group’s actual working capital needs for the long- and short-terms will depend upon numerous factors, including operating results, the cost associated with growing Janel Group either internallyno off-balance sheet arrangements or through acquisition, competition, and the availability under the Presidential Facility. None of these factors can be predicted with certainty. If cash flow and available credit are not sufficient to fund working capital, Janel Group’s operations will be materially negatively impacted.

~~Manufacturing~~

~~First Merchants Bank Borrowing Facility.~~On March 21, 2016, INDCO executed a Credit Agreement with First Merchants Bank (“First Merchants”) with respect to a $6,000,000 term loan and $1,500,000 (limited to the borrowing base and reserves) revolving loan~~(together, the “First Merchants Facility”)~~. Interest will accrue on the term loan at an annual rate equal to the one-month LIBOR plus either 3.75% (if INDCO’s cash flow leverage ratio is less than or equal to 2:1) or 4.75% (if INDCO’s cash flow leverage ratio is greater than 2:1). Interest accrues on the revolving loan at an annual rate equal to the one-month LIBOR plus 2.75%. INDCO’s obligations under the~~First Merchants Facility~~are secured by all of INDCO’s assets, and are guaranteed by the Company. The Credit Agreement requires, among other things, that INDCO, on a monthly basis, not exceed a “maximum total funded debt to EBITDA ratio” and maintain a “minimum fixed charge covenant ratio,” both as defined. The~~First Merchants Facilityrequires monthly payments until the expiration date on the fifth anniversary of the loan. The loan is subject to earlier termination as provided in the Credit Agreement, unless renewed.~~

~~Working Capital Requirements.~~~~INDCO’s cash needs are currently met by~~cash flow from operations, the First Merchants Facility, and cash on hand. As of June 30, 2017, INDCO had $1,500,000 available under its $1,500,000 revolving facility, subject to collateral availability, and $657,366 in cash. The Company believes that the current financial resources will be sufficient to finance INDCO operations and obligations (current and long-term liabilities) for the long- and short-terms. However, actual working capital needs for the long- and short-terms will depend upon numerous factors, including operating results, the cost associated with growing INDCO either internally or through acquisition, competition, and available credit under the revolving credit facility. None of these factors can be predicted with certainty. If cash flow and available credit are not sufficient to fund working capital, INDCO’s operations will be materially negatively impacted.

~~Current Outlook~~

The results of operations for both Janel Group and INDCO are affected by the general economic cycle. Janel Group is particularly influenced by global trade levels, specifically the import and export activities of its current and prospective customers. Historically, Janel Group’s quarterly results of operations have been subject to seasonal trends which have been the result of, or influenced by, numerous factors, including climate, national holidays, consumer demand, economic conditions, the growth and diversification of Janel Group’s international network and service offerings, and other similar and subtle forces.

The Company cannot accurately forecast many of these factors, nor can it estimate accurately the relative influence of any factor and, as a result, there can be no assurance that historical patterns, if any, will continue in future periods.

Both Janel Group and INDCO are implementing business strategies to grow revenue and profitability for the current fiscal year and beyond. Janel Group’s strategy calls for additional branch offices, introduction of new revenue streams for existing locations, sales force expansion, additional acquisitions, and a continued focus on implementing lean methodologies to contain operating expenses. INDCO’s strategy calls for introductions of new product lines and wider distribution and promotion of its print- and web-based catalog.

~~- 16 -~~

obligations.

~~In addition to supporting its subsidiaries’ growth plans, the Company may seek to grow by entering new business segments through acquisition.~~

Certain elements of our profitability and growth strategy, principally proposals for acquisition and accelerating our revenue growth, are contingent upon the availability of adequate financing on terms acceptable to the Company. Without adequate equity and/or debt financing, the implementation of significant aspects of the Company’s strategic growth plan may be deferred beyond the originally anticipated timing, and the Company’s operations will be materially negatively impacted.

~~Critical Accounting Policies and Estimates~~

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Since future events and their effects cannot be determined with absolute certainty, the determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and such difference may be material to the financial statements. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to revenue recognition, the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources, primarily allowance for doubtful accounts, accruals for transportation and other direct costs, accruals for cargo insurance, and deferred income taxes. Management bases its estimates on historical experience and on various assumptions which are believed to be reasonable under the circumstances. We reevaluate these significant factors as facts and circumstances change. Historically, actual results have not differed significantly from management’s estimates.

Management believes that the nature of the Company’s business is such that there are few, if any, complex challenges in accounting for operations. Revenue recognition is considered the critical accounting policy.

~~Revenue Recognition~~

~~Global Logistics Services~~

The Company’s Global Logistics Services segment comprises several wholly-owned subsidiaries, collectively known as “Janel Group.” Janel Group derives its revenues from air freight, ocean freight and customs brokerage services.

In its capacity as an air freight and ocean freight service provider, Janel Group acts as an indirect carrier: it does not own any transportation assets. Rather, it purchases transportation services from direct carriers (airlines, steam ship lines, etc.) and resells them to its customers. By consolidating shipments from multiple customers and availing itself of its buying power, Janel Group is able to negotiate favorable rates from direct carriers and offer to its customers better rates than the customers could obtain themselves.

Air freight revenues include charges for carrying shipments when Janel Group acts as an air freight consolidator. Ocean freight revenues include charges for carrying shipments when Janel Group acts as a Non-Vessel Operating Common Carrier (“NVOCC”). Janel Group issues a House Airway Bill (“HAWB”) or a House Ocean Bill of Lading (“HOBL”) to customers as the contract of carriage. In turn, when the freight is physically tendered to a direct carrier, Janel Group receives a contract of carriage known as a Master Airway Bill for air freight shipments and a Master Ocean Bill of Lading for ocean freight shipments. At this point, the risk of loss passes to the carrier; however, in order to claim for any such loss, the customer is obligated to pay the freight charges.

Based upon the terms of the contract of carriage, Janel Group recognizes air freight and ocean freight revenues when the freight is tendered to the direct carrier. Costs related to the shipments are recognized at the same time.

In some cases, Janel Group acts as an agent for the shipper, in which case it does not issue a HAWB or a HOBL. Revenues from these activities include only commission and fees earned for services performed. They are recognized upon completion of services.

In its capacity as a customs broker, Janel Group provides multiple services, including preparing documentation necessary for clearing shipments through U.S. customs, calculating and providing for payment of duties and other charges on its customers’ behalves and arranging for required inspections. Revenues derived from these activities are recognized upon completion of the services.

~~- 17 -~~

The movement of freight may require multiple services. In most instances, Janel Group may perform multiple services including destination break bulk and value-added services such as local transportation, distribution services and logistics management. Each of these services has separate fee that is recognized as revenue upon completion of the service.

Customers frequently request an all-inclusive rate for a set of services known as “door-to-door services.” In these cases, the customer is billed a single rate for all services from pickup at origin to delivery. The allocation of revenue and expense among the components of services when provided under an all-inclusive rate are done in an objective manner on a fair value basis in accordance with Emerging Issues Task Force (EITF) 00-21, “Revenue Arrangements with Multiple Deliverables.”

~~Manufacturing~~

The Company’s Manufacturing segment comprises its majority-owned INDCO subsidiary, which manufactures and distributes industrial mixing equipment. INDCO derives its revenues from product sales and shipping and handling charges, net of actual product returns and discounts. Since INDCO’s standard shipping terms are FOB shipping point, revenue primarily is recognized on the date products are shipped to the customer. INDCO recognizes revenues from both e-commerce and traditional channels in the same manner. Accounts receivable are stated at their estimated net realizable value. INDCO makes an allowance for doubtful accounts based on its analysis of customer accounts and its historical experience with accounts receivable write-offs.

~~Estimates~~

While judgments and estimates are a necessary component of any system of accounting, the Company’s use of estimates primarily is limited to the following areas that, in the aggregate, are not a major component of the Company’s consolidated statements of operations:

~~accounts receivable valuation;~~

~~the useful lives of long-term assets;~~

~~the accrual of costs related to ancillary services the Company provides;~~

~~accrual of tax expense on an interim basis;~~

~~deferred tax valuation allowance; and~~

~~impairment of intangible assets.~~

Management believes that the methods utilized in these areas are non-aggressive in approach and consistent in application. Management believes that there are limited, if any, alternative accounting principles or methods which could be applied to the Company’s transactions. While the use of estimates means that actual future results may be different from those contemplated by the estimates, the Company believes that alternative principles and methods used for making such estimates would not produce materially different results than those reported.

~~Recent Accounting Pronouncements~~

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company belis that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations, and cash flows when implemented.

ITEM 4.

CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures ~~(as~~designed to ensure that ~~term is defined~~information required to be disclosed in ~~Rules 13a-15(e) and 15d-15(e)~~reports filed under the Securities Exchange Act of 1934, as amended ~~(“Exchange~~(the “Exchange Act”)~~) that are designed to provide reasonable assurance that information, which is required to be disclosed in the reports that it files or submits under the Exchange Act,~~, is recorded, processed, summarized and reported within the specified time periods, ~~specified in the rules~~ and ~~forms of the Securities and Exchange Commission, and~~that such information is accumulated and communicated to management, ~~in a timely manner. The Company’s~~including our Chief Executive Officer and ~~Chief~~Principal Financial Officer, ~~have~~as appropriate, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

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Our management, with the participation of our Chief Executive Officer and our Principal Financial Officer, evaluated ~~this system~~the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of June 30, 2022, the end of the period covered by this ~~quarterly report,~~Quarterly Report on Form 10-Q. Consistent with guidance issued by the SEC that an assessment of internal controls over financial reporting of a recently acquired business may be omitted from management’s evaluation of disclosure controls and procedures, management is excluding an assessment of such internal controls of ELFS from its evaluation of the effectiveness of the Company’s disclosure controls and procedures. ELFS, which the Company acquired on September 21, 2021, constituted 17 percent of the Company’s total assets and 45 percent of income before income taxes of the Company as of and for the quarter ended June 30, 2022. Based on this evaluation, the Company’s Chief Executive Officer and Principal Financial Officer have concluded that as of the ~~system~~end of such period, the Company’s disclosure controls and procedures were effective.

As referenced above, the Company acquired ELFS on September 21, 2021. The Company is ~~effective. There~~in the process of reviewing the internal control structure of ELFS and, if necessary, will make appropriate changes as it integrates ELFS into the Company’s overall internal control over financial reporting process. Other than as described above, there have been no changes in ~~our~~the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the ~~most recent fiscal~~ quarter ended June 30, 2022 that ~~have~~has materially affected, or ~~are~~is reasonably likely to materially affect, our internal control over financial reporting.

~~- 18 -~~

PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

Janel is occasionally subject to claims and lawsuits which typically arise in the normal course of business. While the outcome of these claims cannot be ~~predicated~~predicted with certainty, management does not believe that the outcome of any of these legal matters will have a material adverse effect on the Company’s ~~financial position or~~business, results of ~~operations.~~

operations, financial condition or cash flows.

ITEM 1A.

RISK FACTORS

For a discussion of the Company’s potential risks or uncertainties, please see “Part I—Item 1A—Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021. There have been no material changes to the risk factors disclosed in Part I—Item 1A of the Company’s 2021 Annual Report.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no unregistered sales of equity securities during the nine months ended June 30, 2022. In addition, there were no shares of Common Stock purchased by us during the nine months ended June 30, 2022.

ITEM 5.

OTHER INFORMATION

On August 1, 2022, Indco and First Merchants Bank entered into Amendment No. 3 to the First Merchants Credit Agreement, modifying the terms of Indco’s credit facilities. Under the revised terms, the credit facilities consist of a $5.500 term loan, a $1,000 (limited to the borrowing base and reserves) revolving loan and the continuation of a mortgage loan in the original principal amount of $680. Interest will accrue on the term loan at an annual rate equal to one-month adjusted term SOFR plus either 2.75% (if Indco’s total funded debt to EBITDA ratio is less than 2:1), or 3.5% (if Indco’s total funded debt to EBITDA ratio is greater than or equal to 2:1). Interest will accrue on the revolving loan at an annual rate equal to one-month adjusted term SOFR plus 2.75%. Interest will accrue on the mortgage loan at an annual rate of 4.19%. Indco’s obligations under the First Merchants Credit Facilities are secured by all of Indco’s real property and other assets, and are guaranteed by Janel, and Janel’s guarantee of Indco’s obligations is secured by a pledge of Janel’s Indco shares. The term loan and revolving loan portions of the First Merchants Credit Facilities will expire on July 31, 2027, and the mortgage loan will mature on July 1, 2025 (subject to earlier termination as provided in the Credit Agreement), unless renewed or extended.

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ITEM 6.

EXHIBIT INDEX

~~Exhibit No.~~ 31.1		Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer (filed herewith)
~~3.1~~ 31.2		~~Articles~~Rule 13a-14(a)/15d-14(a) Certification of Incorporation of Wine Systems Design, Inc. (predecessor name) (incorporated by reference to Exhibit 3A to Wine Systems Design, Inc. (predecessor name) Registration Statement on Form SB-2 filed May 10, 2001, File No. 333-60608)Principal Financial Officer (filed herewith)
~~3.2~~ 32.1		~~Restated and Amended By-Laws~~Section 1350 Certification of ~~Janel Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed November 1, 2013, File No. 333-60608)~~Principal Executive Officer (filed herewith)
~~3.3~~ 32.2		~~Certificate~~Section 1350 Certification of ~~Designation of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed January 17, 2007 File No. 333-60608)~~Principal Financial Officer (filed herewith)
~~3.4~~101		~~Certificate of Designation of Series B Convertible Preferred Stock (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed October 22, 2007, File No. 333-60608)~~
~~3.5~~		~~Certificate of Designation of Series C Cumulative Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed August 29, 2014, File No. 333-60608)~~
~~3.6~~		~~Certificate of Change pursuant to NRS 78.209 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed April 21, 2015, File No. 333-60608)~~
~~3.7~~		~~Amendment to Certificate of Designation After Issuance of Class or Series pursuant to NRS 78.1955 for Series C Cumulative Preferred Stock (incorporated by reference to Exhibit 3.1 to~~ Interactive data files providing financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~March 31, 2016, File No. 333-60608)~~
~~3.8~~		Amendment to Certificate of Designation After Issuance of Class or Series pursuant to NRS 78.1955 for Series C Cumulative Preferred Stock (incorporated by reference to Exhibit 3.7 to the Company’s Quarterly Report on Form 10-QJune 30, 2022 for the ~~quarter ended March 31, 2017, File No. 333-60608)~~
~~3.9~~		Certificate of Amendment to Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed April 21, 2015, File No. 333-60608)
~~10.1~~		~~Janel World Trade, Ltd. 2013 Non-Qualified Stock Option Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 1, 2013, File No. 333-60608)~~
~~10.2~~		~~Janel Corporation 2017 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, File No. 333-60608)~~
~~10.3~~		~~Loan~~three and Security Agreement dated March 27, 2014 between Janel World Trade, Ltd. and its subsidiaries, and Presidential Financial Corporation (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 2, 2014, File No. 333-60608)
~~10.4~~		First Amendment to the Loan and Security Agreement, dated September 10, 2014 between Janel World Trade, Ltd. and its subsidiaries, and Presidential Financial Corporation (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed September 16, 2014, File No. 333-60608)
~~10.5~~		Second Amendment to the Loan and Security Agreement, dated September 25, 2014 between Janel World Trade, Ltd. and its subsidiaries, and Presidential Financial Corporation (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed September 30, 2014, File No. 333-60608)
~~10.6~~		Third Amendment to the Loan and Security Agreement, dated October 9, 2014 between Janel World Trade, Ltd. and its subsidiaries, and Presidential Financial Corporation (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 15, 2014, File No. 333-60608)
~~10.7~~		Fourth Amendment to the Loan and Security Agreement, dated August 18, 2015, by and among Janel Corporation (formerly, Janel World Trade, Ltd.), Janel Group, Inc. (formerly, the Janel Group of New York), The Janel Group of Illinois, The Janel Group of Georgia, The Janel Group of Los Angeles, Janel Ferrara Logistics, LLC, Alpha International, LP, PCL Transport, LLC and Presidential Financial Corporation (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 20, 2015, File No. 333-60608)
~~10.8~~		Amended and Restated Demand Secured Promissory Note made by Janel Corporation (and its subsidiaries) in favor of Presidential Financial Corporation, dated August 18, 2015 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed August 20, 2015, File No. 333-60608)
~~10.9~~		Credit Agreement, effective as of February 29, 2016, by and between INDCO, Inc. and First Merchants Bank (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed March 25, 2016, File No. 333-60608)
~~10.10~~		Term Loan Promissory Note, effective as of March 16, 2016, made by INDCO, Inc. payable to First Merchants Bank (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed March 25, 2016, File No. 333-60608)

~~- 19 -~~

~~10.11~~		Revolving Loan Promissory Note, effective as of February 29, 2016, made by INDCO, Inc. payable to First Merchants Bank (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed March 25, 2016, File No. 333-60608)
~~10.12~~		Security Agreement, effective as of February 29, 2016, made by INDCO, Inc and the Company, Inc. for the benefit of First Merchants Bank (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed March 25, 2016, File No. 333-60608)
~~10.13~~		Continuing Guaranty Agreement, effective as of February 29, 2016, made by Janel Corporation for the benefit of First Merchants Bank (incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed March 25, 2016, File No. 333-60608)
~~10.14~~		Agreement of Lease dated January 2, 2015 between 303 Merrick LLC and The Janel Group of New York, Inc. (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2014, File No. 333-60608)
~~31.1~~		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer*
~~31.2~~		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer*
~~32.1~~		Section 1350 Certifications*
~~101~~		~~Interactive data files providing financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarter~~nine months ended June 30, ~~2017~~2022 and 2021 in Inline XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Balance Sheets as of June 30, ~~2017~~2022 and September 30, ~~2016,~~2021, (ii) Condensed Consolidated Statements of ~~Income~~Operations for the three and nine months ended June 30, ~~2017~~2022 and ~~2016,~~2021, (iii) Condensed Consolidated Statement of Changes in Stockholders’ Equity for the three and nine months ended June 30, 2022 and 2021, (iv) Condensed Consolidated Statements of Cash Flows for the ~~three~~nine months ended June 30, ~~2017~~2022 and ~~2016,~~2021, and (v) Notes to ~~Unaudited~~Condensed Consolidated Financial Statements*Statements.
104
*		~~Filed herewith~~Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Interactive Data Files submitted as Exhibit 101) (filed herewith)

~~- 20 -~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: August ~~4, 2017~~5, 2022	JANEL CORPORATION
	Registrant

	/s/ ~~Brendan J. Killackey~~Dominique Schulte
	~~Brendan J. Killackey~~Dominique Schulte
	Chairman, President and Chief Executive Officer
	(Principal Executive Officer)

Dated: August 5, 2022	JANEL CORPORATION
	Registrant

	/s/ ~~Carlos Pla~~Vincent A. Verde
	~~Carlos Pla~~Vincent A. Verde
	~~Chief~~Principal Financial Officer,
	~~(Principal Financial Officer)~~ Treasurer and Secretary

~~- 21 -~~

Nevada		86-1005291
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer
~~incorporation or organization)~~		Identification No.)

~~303 Merrick Road – Suite 400~~80 Eighth Avenue
~~Lynbrook,~~ New York, New York		~~11563~~10011
(Address of principal executive offices)		(Zip Code)

Large accelerated filer	¨☐	Accelerated filer	¨☐
Non-accelerated filer	¨ ☐	Smaller reporting company	x☒
~~(Do not check if a smaller reporting company)~~	Emerging growth company	¨☐

			Page

Part I - Financial Information			3

	Item 1.	Financial ~~Statements:~~Statements

		~~Consolidated Balance Sheets as of~~ ~~June 30, 2017 (unaudited) and September 30, 2016~~	3

		Condensed Consolidated Balance Sheets as of June 30, 2022 (unaudited) and September 30, 2021	3

		Condensed Consolidated Statements of Operations for the ~~Three~~three and ~~Nine Months Ended~~nine months ended June 30, ~~2017~~2022 and ~~2016~~ 2021 (unaudited)	4

		Condensed Consolidated Statement of ~~Changes in~~ Stockholders’ Equity for the ~~Nine Months Ended~~three and nine months ended June 30, ~~2017~~2022 and 2021 (unaudited)	5

		Condensed Consolidated Statements of Cash Flows for the ~~Nine Months Ended~~nine months ended June 30, ~~2017~~2022 and ~~2016~~2021 (unaudited)	6

		Notes to Condensed Consolidated Financial Statements (unaudited)	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1223

	Item 4.	Controls and Procedures	1834

Part II - Other Information			35

	Item 1.	Legal Proceedings	1935

	Item 1A.	Risk Factors	35

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

	Item 5.	Other Information	35

	Item 6.	Exhibit Index	1936

		Signatures	21

Title of each class		Trading symbols(s)		Name of each exchange on which registered
None		None		None

	June 30,			September 30,
	2017			2016
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,889,468		$	965,115
Accounts receivable, net of allowance for doubtful accounts of $242,270 and $230,000, respectively		13,323,679			12,353,582
Inventory		332,365			356,875
Prepaid expenses and sundry current assets		314,059			233,716
Total current assets		15,859,571			13,909,288
PROPERTY AND EQUIPMENT, NET		338,218			287,391
OTHER ASSETS
Intangible assets, net (Note 3)		12,041,771			12,373,266
Goodwill		9,101,858			8,443,477
Deferred income taxes		587,983			844,977
Security deposits		122,246			99,658
Total other assets		21,853,858			21,761,378
Total assets	$	38,051,647		$	35,958,057

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable - banks (Note 4)	$	6,674,311		$	6,498,403
Note payable - related party, net of imputed interest (Note 5)		492,635			500,000
Accounts payable - trade		11,635,006			9,298,029
Accrued expenses and other current liabilities		1,832,335			1,254,926
Dividends payable		994,945			623,077
Note payable – other		-			-
Current portion of long-term debt		857,148			857,148
Total current liabilities		22,486,380			19,031,583
OTHER LIABILTIES
LONG-TERM DEBT – BANK
Long-term debt (Note 4)		3,640,179			4,616,540
Long-term debt - related party, net of imputed interest (Note 5)		-			471,108
Deferred compensation		78,568			78,568
Total other liabilities		3,718,747			5,166,216
Total liabilities		26,205,127			24,197,799
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value; 100,000 shares authorized
Series A 20,000 shares authorized and 20,000 shares issued and outstanding at both dates		20			20
Series B 5,700 shares authorized and 1,271 shares issued and outstanding at both dates		1			1
Series C 20,000 shares authorized and 14,205 shares issued and outstanding at both dates		15			15
Common stock, $0.001 par value; 4,500,000 shares authorized, 573,951 shares issued and 553,951 and 573,951 shares outstanding, respectively		574			574
Paid-in capital		12,710,441			12,920,416
Treasury stock, at cost 20,000 shares (Note 6)		(240,000	)		-
Accumulated deficit		(1,700,803	)		(2,161,994	)
Total Janel Corporation stockholders' equity		10,770,248			10,759,032
Non-controlling interest		1,076,272			1,001,226
Total stockholders' equity		11,846,520			11,760,258
Total liabilities and stockholders' equity	$	38,051,647		$	35,958,057

	Common Stock				Preferred Stock				Paid-in			Accumulated			Treasury Stock								Non- Controlling		Total
	Shares		$		Shares		$		Capital			Deficit			Shares		$			TOTAL			Interest		Equity

Balance - September 30, 2016		573,951	$	574		35,476	$	36	$	12,920,416		$	(2,161,994	)		-		-		$	10,759,032		$	1,001,226	$	11,760,258
Net income		-		-		-		-		-			461,191			-		-			461,191			75,046	$	536,237
Dividends to preferred stockholders		-		-		-		-		(383,118	)		-			-		-			(383,118	)		-	$	(383,118	)
Stock-based compensation		-		-		-		-		173,143			-			-		-			173,143			-	$	173,143
Treasury stock acquired		-		-		-		-		-			-			20,000		(240,000	)		(240,000	)		-	$	(240,000	)
Balance - June 30, 2017		573,951	$	574		35,476	$	36	$	12,710,441		$	(1,700,803	)		20,000	$	(240,000	)	$	10,770,248		$	1,076,272	$	11,846,520

	Nine months ended June 30,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	536,237		$	351,306
Plus (loss) from discontinued operations		-			184,845
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Bad debt expense		82,460			341
Depreciation		85,291			62,592
Deferred income tax		256,994			-
Amortization of intangible assets		578,997			402,915
Amortization of imputed interest		21,526			41,954
Stock based compensation		173,143			91,492
Changes in operating assets and liabilities:
Accounts receivable		(753,754	)		1,942,323
Inventory		24,510			(49,397	)
Prepaid expenses and sundry current assets		(87,655	)		(64,279	)
Accounts payable and accrued expenses		1,910,937			(1,924,522	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		2,828,686			1,039,570
NET CASH USED IN DISCONTINUED OPERATIONS		-			(184,845	)
		2,828,686			854,725
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment		(136,118	)		(307,550	)
Cash acquired from acquisition		115,986			-
Acquisition of subsidiary		(100,000	)		(10,734,663	)
NET CASH USED IN INVESTING ACTIVITIES		(120,132	)		(11,042,213	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid		(11,250	)		(11,250	)
Proceeds (payments) from bank loans		(1,032,951	)		5,479,229
Proceeds from sale of preferred series C shares		-			4,352,663
Repayment of notes payable - related party		(500,000	)		-
Treasury stock acquisition		(240,000	)		-
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(1,784,201	)		9,820,642
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		924,353			(366,846	)
CASH AND CASH EQUIVALENTS, beginning of the period		965,115			942,748
CASH AND CASH EQUIVALENTS, end of period	$	1,889,468		$	575,901

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	545,281		$	476,665
Income taxes	$	145,470		$	75,181
Non-cash financing activities:
Dividends declared to preferred stockholders	$	371,868		$	262,165
Acquisition of business:
Intangible assets acquired	$	898,381		$	12,102,838

	Fair Value
Cash	$	377,653
Accounts receivable, net		620,632
Inventory		372,212
Prepaid expenses and other current assets		109,333
Fixed assets		155,050
Accounts payable and other liabilities		(1,690,202	)
Note payable - related party		(129,258	)
Customer relationships and other intangibles		7,700,000
Goodwill		4,402,838
Non-controlling interest		(918,258	)
Purchase price	$	11,000,000

For the three months ended June 30, 2017	Consolidated		Global Logistics Services		Manufacturing		Corporate
Revenues	$	20,246,878	$	17,963,837	$	2,283,041	$	-
Forwarding expenses and cost of revenues		15,445,239		14,455,926		989,313		-
Gross margin		4,801,639		3,507,911		1,293,728		-
Selling, general and administrative		4,002,311		2,870,235		635,680		496,396
Amortization of intangible assets		195,666		-		2,500		193,166
Income (loss) from operations		603,662		637,676		655,548		(689,562	)
Interest expense		184,280		116,672		67,608		-
Identifiable assets		38,051,647		13,976,503		2,343,533		21,731,611
Capital expenditures		5,510		-		5,510		-

For the nine months ended June 30, 2017	Consolidated		Global Logistics Services		Manufacturing		Corporate
Revenues	$	55,943,398	$	49,499,193	$	6,444,205	$	-
Forwarding expenses and cost of revenues		42,698,641		39,810,183		2,888,458		-
Gross margin		13,244,757		9,689,010		3,555,747		-
Selling, general and administrative		11,206,459		8,001,437		1,911,848		1,293,174
Amortization of intangible assets		578,997		-		7,500		571,497
Income (loss) from operations		1,459,301		1,687,573		1,636,399		(1,864,671	)
Interest expense		566,807		356,362		210,445		-
Identifiable assets		38,051,647		13,976,503		2,343,533		21,731,611
Capital expenditures		136,118		22,793		113,325		-

For the nine months ended June 30, 2016	Consolidated		Global Logistics Services		Manufacturing		Corporate
Revenues	$	56,728,456	$	53,935,789	$	2,792,667	$	-
Forwarding expense and cost of revenues		45,438,636		44,171,758		1,266,878		-
Gross margin		11,289,820		9,764,031		1,525,789		-
Selling, general and administrative		9,798,908		8,086,749		805,985		906,174
Amortization of intangible assets		402,915		-		3,333		399,582
Income (loss) from operations		1,087,997		1,677,282		716,471		(1,305,756	)
Interest expense		476,665		382,804		93,861		-
Identifiable assets		33,761,934		12,338,707		1,744,624		19,678,603
Capital expenditures		307,550		2,905		304,645		-